Weekly FOREX Play Jan 15, 2012

EUR/USD Current Price: 1.2682
Daily High/Lows:

EURUSD-Jan-15-2012-436x202

Fri Jan 13 1.2877/1.2623
Thu Jan 12 1.2844/1.2698
Wed Jan 11 1.2789/1.2661
Tue Jan 10 1.2817/1.2741

Pivots: S3: 1.2552; S2: 1.2639; S1: 1.2725; P: 1.2784; R1: 1.2871; R2: 1.2930; R3: 1.2989

EUR/USD: One week ago the EUR/USD low stood at 1.2666 before spending the balance of the week in weak recovery mode. (Three times the EUR/USD tried to attempt higher levels, failing initially at 1.2817, then 1.2844 and finally 1.2877 on Friday, January 13th.) This corrective pattern was a classic Elliott Wave double zigzag in abc form, and once it completed on Friday, the EUR/USD had the potential to trade lower in a wave 5. (See chart) Last week we noted that 1.3076 was the key level to watch although we never traded above it. We also noted that once the pair traded in the target zone of 1.2500 to 1.2650 and traded above 1.2811 we were looking for a correction of the move from 1.3076 to the 1.2666 level. Since that low the EUR/USD precisely corrected that drop 50% up to 1.2877. Since we are close to these major targets highlighted last week, we will likely experience consolidation followed by lower levels. 1.3076 is still the key level on the daily time frame which must hold for the EUR/USD to continue to move lower. However, now that we’ve had such a substantial drop, I’d like to highlight some of the EURO pairs which might provide direction for the coming week. The EUR/GBP, EUR/JPY and EUR/CHF are all in sync with the EUR/USD, and are all in a corrective pattern right now, which will result in another move lower to complete the initial drop. The EUR/CAD and the EUR/AUD, however, have not begun the correction yet, as they are still moving lower. Once a new low is made on the EUR/USD and the EURO pairs, look for a rebound which would retrace the swing move from 1.3076 to new lows.

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