The Euro could surge to the next level of 1.3100 against the US Dollar

On January 24th, I noted in this column that this currency pair (Euro/USD) appeared to be due for an upward correction. The following day was bearish, dropping about 107 pips, but unable to exceed the Jan. 20th low of 1.2764. That set the stage for what, to date, was only a one day rally. The rally was a massive 377 pip move, halting precisely at the confluence of a significant Fibonacci ration and the down sloping Moving Average.

As I write, the market is moving near it’s first level of support, a range between 1.3080- 1.3000. A close below 1.3000 would then bring 1.2860-1.2840 within range. There is a relatively strong probability that this will happen before the high at 1.3240 is broken to the upside. If support in the 1.3000 area is strong enough, the Euro could surge to the next level of 1.3100.


Daily EURO/USD chart as at 29 January 2009 using NextVIEW Advisor. Click on chart for larger view.

TECHNICALS

Stochastic – this short term stochastic is turning down from its’ overbought level.
MACD – is in negative territory, but turning up slightly.
20EMA – short term moving average, flat around 1.3240.
200MA – down sloping
R1 – nearby resistance around 1.3240
R2 – 1.3400
S1 – 1.3000
S2 – 1.2843

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