Wednesday, December 14, 2011

Euro Takes Out Fibonacci .618 Retrace

The previous Euro post from Nov 23, Euro Breaks Down 
says it all, so it is republished in it's entirety, followed by an update.

"
From last Fri Nov 18 post
The Trillion Dollar Question ..Eur/USD

"It needs to accelerate one way or the other.
  
Breaking out of the range will signal the tell; 138 and 134. Again right in the middle of it.
Common sense would suggest that with all the turmoil in Europe the euro is doomed, but here it is at an unlikely 1.35.  
The highs put in last April/May in almost all assets were significant, and lend weight to the interpretation as depicted in the labeling above, implying another series of ABC's down.
 ABC structures frequently have equal (or nearly) legs; that would target 108."

It broke down this morning to new lows under 134. That's the tell mentioned above.
Additionally, the Euro has broken below the .78 retrace of the lesser x wave. Just.
Daily
click to enlarge
Next milestone on the downside is, of course, the overlap of the previous low and beginning of the x wave, at 131.42

The support at 134 was not only horizontal support from Nov. 18 as seen in the daily and hourly chart, but also a 50% retrace of the entire X wave, of larger degree , as labeled on the weekly chart.
 Weekly
click to enlarge
Note that overlapping the 131.42 low would leave very little between it and the next support, .618 of the X wave , at 130.33.
Below 130.33 no real support before the previous low of Jan 10 at 128.70.
Overlapping that level and you're really looking at the lows of 118 for support."

Dec. 14
And it HAS taken out both the overlap at 131.42 and .618 retrace of the preceding abc up, at 130.33, in the last 24 hr.s.
 Weekly
 click to enlarge
Note how long it travels along the lower Bollinger Band following a test of the mean back in May. 
Perhaps that will be repeated this time.
Hourly

click to enlarge
Note the positive divergence on the hourly RSI.
The labeling above is quick and dirty, and intended to suggest the risk of a corrective bounce in here, possibly retesting the break down around 131.40.
In any case lower lows would certainly be expected and bounces likely of short duration.



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