Thu Jan 13 2011 10:04 am EST (GMT -5)
Trader Comments : Regarding a Radar alert we posted on Jan 10th; we said: If price doesn't hold the 1.5700 level; then price should be on it's way to test the 1.5875-1.5900 levels or the .618 Fibonacci retracement level. The pair is almost at these levels and we will look for bearish patterns for signs of a reversal setup. Currently we expect to see .618 retrace level to hold as it is the most common retracement level to hold price. Since the retracement level is in reference to a wave 3; we don't expect it be as obvious of a resistence level for the majority of traders to anticipate and this raises the probability that it might just hold.For the existing Elliot Wave count to maintain it's efficacy; price should not move too much past the 1.5955 level(low of wave 1 on daily chart). If price is not held at the above levels(1.5875-1.5900 levels ); then we look to that 1.5950(low of wave 1) as the final line of defense of the current downtrend. Like commodities; currencies are known to occassionally break one elliott wave rule of overlapping wave 1. In other words; according to the EW rules; for price to overlap wave 1 is to void the wave count yet with commodities/currencies the volitility is such that it can happen occasionally without voiding the wave count.
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