Weekly Forex Play February 5, 2012 EUR/USD

EURUSD-Feb-5-2012-408x239

EUR/USD Current Price: 1.3090
Daily High/Lows:

Fri Feb 3 1.3205/1.3065
Thu Feb 2 1.3196/1.3084
Wed Feb 1 1.3218/1.3025
Tue Jan 31 1.3212/1.3045

Pivots: S3: 1.2926; S2: 1.2998; S1: 1.3071; P: 1.3138; R1: 1.3210; R2: 1.3277; R3: 1.3344

EUR/USD: Over the last week, the EUR/USD has been sidelined, trading in a range between 1.3025 and 1.3225. The trading range environment put a halt to the upward momentum the EUR/USD had the preceding two weeks. This sideways consolidation looks very much like a triangle continuation pattern, which typically resolves itself in a thrust out of the triangle in the direction of the current trend. Since the current trend is up, a thrust out of this triangle could occur this week and would put the EUR/USD at higher than current levels before turning back down again. A move up would complete the wave iv abc pattern that is playing out seen on the 4-hour chart. If we measure the height of the triangle at 200 pips, that would project a move up for the EUR/USD to approximately 1.3350 to 1.3400. Looking at the FIBO targets, the 38.2% FIBO retracement from the high of 1.4245 on October 27, 2011 to the low of 1.2627 on January 16, 2012 brings us to 1.3248 followed by the 50% retracement at 1.3440. The triangle target would coincide with a FIBO move of between 38.2% and 50%. On the downside, watch S1 at 1.3071 and the supporting trend line which now comes in at about 1.3050. That level remains key support, and if broken, the 1.2930 will garner support followed by 1.2880. Day trading is still in order, rather than taking a strong view at this time on the daily charts.

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