EUR/USD  Still in Consolidation; Invalid Bullish Count

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  • 4H: The EUR/USD was expected to reach 1.29 and maybe even 1.2950 last week. This area was expected to be resistance for the market, and a decline was expected towards 1.28. Refer to“Weekly Technical Update 9.3.2010“.
  • The high of A could have been alternately the high of wave 1. However, now that the market fell below 1.28, this bullish count is no longer valid. Instead, the market is showing continuing consolidation. The C wave had bullish internals, but now that we are complete with that short-term bullish attempt, the intermediate term mode is unclear.
  • The count is now possibly a “D” or “X” wave connecting the finished ABC wave to further consolidation. Therefore a swing towards 1.26 can be expected.
  • Also, note the RSI reading in the 4H breaking below 40 to show that a bullish assessment is invalid. The RSI in the daily chart however remains above 40 showing that the bullish mode in this time-frame is still valid.
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  • Day: Looking at the pair from a longer time-frame perspective, the market shows not bias bullish or bearish. But in the short-term we may have some bearish bias after the market broke below the rising trendline, and this was a sharp decline too.
  • The market now rounds off a possible bearish reversal candlestick combination, suggesting a decline towards 1.26 and possibly even towards 1.2450. As long as 1.2450 holds, these declines would still be within the context of a larger scale bullish mode.
  • Again, looking at the daily, the bullish and bearish biases of different degree needs to battle it out and resolve a direction outside of the current range. This current short-term range is between resistance of 1.29 and support at 1.26, with a higher likelihood of the support being tested first.