Near term EUR/USD outlook: last Friday the market was lower after breaking below the Bullish trend-line base of the possible triangle that had been forming since September, currently at 1.2960/75, now the Resistance.
This is seen as a Bearish sign and raises the potential for further Southside acceleration ahead
Note: from an Elliott Wave analyst’s perspective, the market may be within wave iii, from the 17 October high at 1.3135, of a larger wave 3, from the September high at 1.3165, see the numbering on daily chart below and adds to the potential for a further, downside acceleration ahead, the so called “3rd of 3rd” waves are often the most “explosive” part of a cycle). Nearby support is seen in the 1.2805/30, 200-Day MA and 1 October low, and the base of the Bearish channel since the September high at 1.2750/65.
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Strategy/position: Short from the 23rd of October sell at 1.2975, with potential for a further downside acceleration ahead and increased likelihood that a more major Top is in place, so would stay with that position. Used a close above the Bearish trend-line from the mid October high as a Stop and though it traded above temporarily early last week, it did nto closed above that mark, for now will continue to Stop above that trend-line, and making a small adjustment for the temp break above, currently at 1.2990/00.
Longer term outlook: looking for a multi-month period of ranging higher from the July low, before resuming the longer term decline. Expected a final, short-lived push above the September high at 1.3165 before completing a more important top, but given the nearer term bearish outlook, looks more like that Top is in place. This targets a eventual decline to the July low at 1.2045 and lower, the seasonal chart points sharply higher into the end of the year and raises some risk for another few months of choppy/volatility as part of a broader topping.
Strategy/position: with the likelihood increased that a more important top is in place, and correction since July is finally “complete”, would switch the longer term Neutral bias, from 31 July at 1.2300 back to the Bearish side here, currently at 1.2845.
Current: short 16 October at 1.2975, stop on close above Bear t-line from mid October now at 1.2990/00.
Last : short Oct 9th at 1.2870, stopped Oct 16th on close above 1.3020 (closed at 1.3050).
Longer term: Bearish bias 2 November at 1.2845, some risk for another month or 2 of a broader topping.
Last : Neutral 31 July at 1.2300 from Bearish 15 February at 1.3085, warned of few months of correcting.
Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster’s Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.
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