In the eur/$, no change in longer term view as the market is seen within an extended period of wide ranging since the Oct 2008 low at 1.2335. Warned back in March (and the market just above the 1.2335 low, base) of eventual gains all the way back to the Dec 2008 at 1.4715 (ceiling) and even slightly above, and the market did indeed reach a high at 1.5140 in Nov/Dec (also the ceiling of the bull channel from Oct 2008). Still view the market as completing a major top at those highs (switched the longer term bias to the bearish side on Nov 2nd at 1.4825), with eventual declines toward 1.4125/75, 1.3750/00 (50% retracement from the Oct 2008 low at 1.2335) and even below (see “ideal” scenario in red on weekly chart below) over the next number of months. Note too that the weekly macd remains in sell mode (see bottom of weekly chart), adding weight to the view of an important top. However, there is risk for deeper bounce over the nearer term (see below), before resuming the longer term downside.
Nearer term, been warning since Dec 24th of a few weeks of consolidating higher, before resuming of the bigger picture downtrend. The market has indeed ranged upward, but there are still firm signs that this period of correcting is “complete”, and in turn leaves open scope for more of the same (and even higher prices) ahead. Currently not seen as a good risk/reward in either side of the market so for now, would remain patient for a better entry ahead (expected to be on the short side for new lows). Note too can also trade with a shorter term time horizon, fading key support/resistance areas, and then aggressively trailing stops to keep risks at a minimum. Note too that the market is currently trading near the ceiling of the bull channel since Dec (currently at 1.4490/05) and can use this area as a short term “pivot” (long above, short below). Further resistance is seen at 1.4570/80 and 1.4680/90 (50% retracement from the 1.5140 high), while nearby support is seen at 1.4400/10 and the base of the multi-week channel (currently at 1.4270/85).
