The EURO Pairs Rebound Jan 22, 2012


EUR/USD Current Price: 1.2930
Daily High/Lows:

Fri Jan 20 1.2985/1.2886
Thu Jan 19 1.2970/1.2838
Wed Jan 18 1.2867/1.2733
Tue Jan 17 1.2808/1.2648

Pivots: S3: 1.2706; S2: 1.2793; S1: 1.2879; P: 1.2925; R1: 1.3011; R2: 1.3056; R3: 1.3102

EUR/USD: The EUR/USD made a new low by only 4 pips at the start of the week on Monday, January 16, 2012 before the major correction started. The aforementioned targets between 1.2500 and 1.2650 were met and staunchly held. The EUR/USD wasn’t even able to test the 1.2500 big figure before reversing. Last week we noted that 1.3076 was the key level to watch and it still stands, as a move above that level will mean more than a 100% correction of the last swing move, which would almost signal a change in the major trend. Therefore, shorts held against that level on the daily chart are still in order. Now that we’ve had such a major correction, I’d like to highlight some of the EURO pairs which might provide direction for the coming week. The EUR/GBP and EUR/JPY are in sync with the EUR/USD, as all three pairs have corrected the last swing move by 38.2%, with the EUR/USD and the EUR/JPY meeting psychological resistance at 1.3000 and 100 respectively. The commodity pairs, namely the EUR/CAD and the EUR/AUD, however, have only corrected the last swing move by 23.6%. They also lagged by one day, meaning that the other Euro pairs started the rebound a day earlier than the commodity pairs. In fact, of all the pairs, the EUR/GBP and the EUR/AUD gave back half of the gains made by the end of the week, signifying weakness. The EUR/CHF attempted the 23.6% area but closed the week at the market lows. While it is not clear if this consolidation is completely over yet, we have not violated the downtrend in any of these pairs and the sustainability of the Euro rebound is suspect. With these Euro pairs, continue to monitor the Fibonacci resistance levels for a move above the 23.6% will target the 38.2% and a move above the 38.2% will target the 50%. In the case of the EUR/USD, the 1.3076 level is key, and that also happens to be close to the 50% FIBO level.

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