Eight year Euro bull run may be over

The market continues to be volatile. Large daily ranges are still common.

On October 10th this currency pair reached a low of 1.3255, the lowest since June of 2007. the low also coincided with two or more important Fibonacci ratios, which considering the jitteriness in the financial markets, was enough to trigger an explosive up move. That up move puttered out rather quickly over the next few days and the low at 1.3255 is being threatened again.

A breach of 1.3255 should trigger a move down at least to 1.3000 which is the 38% retracement level of the Euro bull market that began in October, 2000.

Between 1.3000 – 1.2800 there is a great deal of support. If the market reaches down that far, and that is now highly likely, we will very likely see an upward drive that will last from several days to several weeks.

If the 1.2800 level is penetrated downwards, the eight year Euro bull run may be over and much lower values for the Euro could be in the works.

TECHNICALS


EUR/USD chart as at 16 October 2008 using NextVIEW Advisor

The weekly MACD and Stochastic (not shown), are still firmly down.
On the daily chart, mid to short term Stochastics are down, along with the MACD. However there may be enough support around 1.3300 to 1.3255 to ward off a downside break out a little while longer.

R1 – nearby resistance at 1.3800.
R2 – 1.4867. Between R1 and R2 there is a weak resistance zone between 1.400-1.4500.
S1- immediate support at 1.3255.
S2 – an even stronger support area appears in the zone from 1.3000- 1.2800.

MACD – down
NextView RSI – down
Stochastic – unconfirmed down at time of writing.
EMA 21 – firmly down.

Article and Commentary by Don Schellenberg. Mr Don Schellenberg is Senior Market Strategist of the NextView Group. A trader and trading coach, he is a noted expert on Market Structure, Elliott Wave and Fibonacci. He trades the forex market.