EUR/USD fractal outlook

[Paul Koszarny]

EUR/USD fractal outlook

EUR/USD has retraced 50% of the decline 1.1080-1.0498 and neutralized speculative bias triggering stop losses at 1.0750. The significance of the Fibonacci level makes it unlikely that no selling pressure from 1.0800 will be visible. From the point of view of the model Friday’s close 1.0776 is exactly the same as a fortnight attractor and also Bollinger bands indicate a return to the average. Thus the picture is neutral when viewed through levels and only technical indicators suggest the new week will begin with some pull back towards the region of big figure 1.0700. We had a whole week of dollar declines and now EUR/USD is inside a contracting triangular formation, back again above regained support 1.0702 and below 1.0830. The close of last week is rather too high to count on Monday’s fractal day for a key reversal and instead I would rather see Thursday or Friday as crucial sessions. Thursday, if the market posts a new high or Friday, for a new low. Fractals draw a boundary from 1.0830 to 1.0812 capping any further upward movement. Should we see a break above there, EUR/USD will probably be contained by 1.0950 on the indicated model Thursday. The big bullish gap on hourlies still haunts sellers, and though Asian options had tried to squeeze buyers below 1.0685, they gave up on Friday and the crossing through 1.0750 was a particularly deep cut. We didn’t see any profit taking but I would expect some to emerge soon.

[Paul Koszarny]

EUR/USD broke 1.0830 yesterday and tested minor resistance 1.0929, slightly below major 1.0950. We had very overbought conditions on hourly charts and stochastics show some negative divergence. At the moment EUR/USD is heading lower with rapidly declining stochastics typically to a bullish market. Not much change of the price yet. Bollinger bands are pretty tight and exponential MAs close to give a sell. I was short at 1.0919 with the stop moved to 1.0900, target 1.0867 but I have just been stopped with a minor profit of 20pips.

[Paul Koszarny]

The operators lifted EUR/USD up to 1.0955 during the least liquid hours after the closing of New York and opening of Tokyo and then trapped happy buyers. As indicated by the model we have seen a rejection near major resistance and shorts opened at 1.0950 gave healthy 120 pips of profit. EUR/USD touched today's support 1.0812 where intra-day shorts were liquidated. Medium term 1.1400 needs to be put aside to another season I suppose as hourlies formed a typical key reversal pattern, a harbinger of further euro/dollar declines. How much lower it can be is perhaps a good question for the nearest two months.

[Paul Koszarny]

Stock market sentiment improved widely with major indices a few percent up this session and on the shoulders of it EUR/USD collapsed from early Asian top at 1.0955. The initial drop to first daily support 1.0812 slowed down a bit, though any attempt to go long from there during a five-hour consolidation fell short of buyers' expectation and further declines were seen, this time to almost 1.0750. The last rise towards 1.0950 is a clear example of
mastery of the operators and the so called free market. Behind were visible big names who trampled quite a number of less flexible investors. Just to give an example from my local courtyard, EUR/PLN was lifted to a magnificent 4.4838 through an effort of some German banks to earthquake Polish exporters who had hedged at levels much lower than that. Stops were triggered and few positions opened anew because 17:00CET of the high was already after local closing hours. Today EUR/PLN dropped 1800 pips. EUR/USD wrongfooted traders had to evacuate rapidly and this Wednesday will undoubtedly be remembered for severe wounds. The hourly picture remains weak for the euro. The down trend is already over 21 hours long leaving us with terribly oversold indicators. The top of the week came one day before the forecast. It appears that under these conditions EUR/USD could bottom out only at 1.0650 for some decent retracement though we are entering this week's fractal area where there may be some reaction. The nearest strong support lies at 1.0726.

[Paul Koszarny]

EUR/USD tested major support 1.0726 early Tokyo hours with positive divergences and bounced off its low towards yesterday's lost 1.0812. A biggest part of the bounce is practically over and I presume that the happiest longs have closed on approach to big figure 1.0800.
I am on standby until 13:00.

[Paul Koszarny]

EUR/USD broke lower below today's support so there should be no problem in reaching 1.0650, the target of correction after 1.0498-1.0955.