EUR/USD fractal outlook

[Paul Koszarny]

EUR/USD fractal outlook

EUR/USD continues sliding downwards moderately. After 1.0555-1.0830 movement from Monday to Thursday which retraced 61.8% of 1.0955-1.0555, we saw quite a fast correcting wave. EUR/USD touched a low 1.0692 and short covering lifted the pair to 1.0755. It should be a textbook exercise for anyone who challenges Fibonacci with spaghetti numbers as the precision of the real market performance is really remarkable now. Great for technicians but upsetting for fundamentalists who prefer short stories of various authorities. Last week’s close below resistance 1.0758 looks negative. Fast moving averages on weekly charts are still in a cluster, suggesting a strong movement ahead in the system. Since we have not had such, the question is how much up or how much down EUR/USD could move, especially when volatility is far from disappointing any trader. Some indications should be seen from major bourses which had a spectacular Monday in a very distributive mode on its peak and then falls of indices prevailed all across the board. From the model point of view EUR/USD posted a local high near the fractal day and it implies further movement south until the next fractal day. Although last week I indicated Friday, it was valid for a low whereas a local high calls for a shift of the model day to Thursday. Thus we should concentrate attention on Tuesday for a local high and Friday for a local low in the new week. Friday seems more significant of the two. The sharp reaction from 1.0555 on Monday highlights support from 1.0576 until 1.0601. Immediate resistance comes near 1.0758, followed by 1.0799. I will welcome EUR/USD moving lower, though exuberance in any direction will be used for contrarian trades and I rarely take risks of making a guess which way to go. The nearest model hour is at 11:00CET. On Tokyo hours the only important spot is at 3:00-4:00CET with hourly support 1.0693. It is possible that from midday Europe we will be having one direction until the close of NYSE.

[Paul Koszarny]

EUR/USD bouced off today's low 1.0715 to test first resistance 1.0758. From there a sharp reaction pushed the pair lower again some 30pips. Pretty good profit in a very short time. The market is being traded in the shadow of New York's session in a quiet tone. Major bourses down early Monday as expected, therefore if extended on later hours and Wall Street, may weigh on the dollar.

[Paul Koszarny]

EUR/USD moved higher yesterday but was sharply rejected at a next resistance 1.0799. Some 60pips below found enough buyers to gather steam from 9:00CET. Before New York's opening most bourses are faring very well, and the loss of correlation of the dollar with Wall Street indices is somewhat disappointing. So the situation has been unfavourable for shorting euro/dollar. From the point of view of TA a break above the last retracement of 1.0955-1.0555 will make sellers look like endangered spieces. I will try selling at 1.0833 with a very tight stop. Hope it's not a dodo trade. Meantime I shorted at 1.0793 for a few pips, already closed.

[Paul Koszarny]

As indicated I shorted at 1.0833 and added at 1.0845. This is the first model hour right now (11:00CET) and there is a sharp reaction prior to publishing EU statistics at midday. Very strong resistance comes at 1.0883. No divergence on stochs or RSI.

[Paul Koszarny]

It's an entirely new situation on EUR/USD because we are seeing a trend. Let's go back to the two indications I had mentioned before. One from Wall Street indices. The bifurcation from last week's Monday clearly signalled distribution and it was not the dollar making stupid faces but New York making false pretences to rise thereafter. The second indication was the picture on weekly moving averages. Fast moving averages on weekly charts were in a cluster, suggesting a strong movement ahead in the system. Naturally I was stopped and without the stop I would be really endangered on those short positions. It may not be very important how much overbought the market is now, as EUR/USD has broken much higher and is eyeing tomorrow's resistance 1.0960 before a temporary relief. The market moved so high that EUR/USD will probably remain very bullish until Monday, April 21. Today's fractal breakout is more serious than the one on March 12, and as such has new potential to peak at 1.1073 in the course of three more sessions. Due to Easter holidays Monday will be much less liquid making it relatively easier to generate higher volatility. We have initial support 1.0905 for Thursday.

[eka sutikna]

too much word to say just buy here and cut here or sell here cut here, what are you trying .....? speech

[Fire580]

Paul... I feel just the opposite - your reports are the very first I look for each day - I just want you to know that I appreciate you taking the time to come up with such informative information on a daily basis - thanks again

[Paul Koszarny]

EUR/USD touched 1.0960 on Tokyo hours and it doesn't matter why as it's off its local high right now about 50 pips. I haven't seen such an overbought market for a very long time. M15 charts clearly signalled negative divergences on stochs and RSI. This temporary relief is a minimum correction on fractals and 1.0905 is today's first support. I will look for a new opportunity after 13:00CET, the first model hour. I had shorted at 1.0960 and closed already squaring two days of trade. Interesting signals from Polish emerging market. Futures FW20M3 which reflect WIG20 sentiment yesterday generated bifurcation on volume near a local low after a slide 1183-1130. If you recall early March posts we had one buy signal at 1066, a rally to 1183 and a sell at 1178. Now at a trend support another buy signal. It makes me reflect that there will be an improvement of sentiment on major bourses. Assuming some correlation with the dollar it should be dollar supportive.