EUR/USD Current Price: 1.2958
Fri Dec 30 1.2998/1.2903
Thu Dec 29 1.2963/1.2857
Wed Dec 28 1.3079/1.2911
Tue Dec 27 1.3082/1.3042
Pivots: S3: 1.2751; S2: 1.2821; S1: 1.2890; P: 1.2926; R1: 1.2996; R2: 1.3032; R3: 1.3069
EUR/USD: The EUR/USD has been trending down since the high swing of 1.4245 on October 27, 2011 amidst the European debt crisis, which is still unresolved. Alas, the EUR/USD hit a temporary bottom on December 29, 2011 at 1.2857, with a hammer reversal candlestick pattern which subsequently took the pair up to a corrective high of 1.2998. The most recent swing high of 1.3197 must remain in force for the EUR/USD to continue its move down, for if that level is breached, a more extended correction will take place. Wave 3 extension targets include: 100% at 1.2848 (target met); 127% at 1.2466; 138% at 1.2309; and 162% at 1.1977. Further support will result from previous lows of 1.2873 (Jan 2011), 1.2586 (Aug 2010), and 1.1879 (Jun 2010). The theme to sell the rallies is in order for the start of 2012. Since the trend is established, as traders we need to catch a slice of the move. Since we are in oversold territory, the best time to sell is after price retraces. In other words, we want to continue to sell on strength with reasonable stops. On the daily time frame, our initial stop loss will be at the 1.3197 level, so selling close to that level is advisable. The other option is to move to a smaller time frame to look for sells with tighter stops.
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