- 4H: This is a followup on the Forex Video Technical Update 6.8.2010 and the Forex Weekly Technical Update 6.4.2010.
- The weekly update discussed a chance of correction to test 1.2150 area, and the market is doing that now. It is trading just below 1.2150, the support of the declining triangle. The projection of 1.17 remains valid.
- The chart shows alternative count where we are still currently in e'.
- Let's take a look at the internal to see if we should expect 1.2150 to hold as resistance.
- 1H: The rally today sets up the pair at the first expected resistance zone near 1.2150. This is just below the 50% retracement. The 1.2150 was support to the triangle in the 4H chart. The pair is testing the SMA 200.
- Another bearish signal is the formation of a butterfly pattern along with a bearish divergence with the RSI.
- According to a count, where I have i-ii-iii-iv, where we are in iv, the 121.50 is the max it can go, and should not cross it.
- However, although wave ii and iv should be dissimilar in form and time, the disparity here is too large for me. Therefore the alt count that we are in wave ii and not iv, is making more sense at the moment.
- The alt count d' and e', mentioned first in the 4H chart, are still there to be entertained, until the market clearly shows it is in a bearish impulse wave.
- The first half of the internals are shown here in the channel, I suspect we are now in the second half, finishing up.
- NOW, the more practical question issue is whether 1.2150 should be expected to provide resistance. Yes, i can be, but even within the context above, the current rally can extend to 1.2230 (61.8% retracement, although pass through the 1.2150 resistance area might give us concern about the bearish outlook, but not completely invalidate it).
- Breaking below the 121.50 level and the near-term rising support (not shown), may indicate that the impulse wave down is initiated. A stronger confirmation comes from a break below 1.1950.
- The intermediate term 1.17.
Fan Yang Currency Analyst Commodity Trading Advisor
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