Wednesday, February 2, 2011

EUR/USD – Current Trend Up - Buy the Pullbacks until we have a Reversal

*EUR/USD Current Price:* 1.3846

*Daily Pivots:* S3: 1.3531; S2: 1.3630; S1: 1.3729; P: 1.3787; R1:
1.3886; R2: 1.3943; R3: 1.4001

*EUR/USD:* Price action on the EUR/USD for the last three weeks has
been up. This has occurred even with some profit-taking on some of the
Euro crosses such as the EUR/GBP, EUR/JPY and EUR/AUD over the last
few trading days. Since last week, we had a very short-lived sell-off
in the EURUSD which lasted one day and took us down from the highs of
1.3760 to 1.3570 before impulsively trading higher again. Last week we
said, "In the mean time, when we measure the FIB retracement of the
last swing move down from 1.4283 on November 4th to 1.2859 on January
10th, we are approaching the 61.8% level at 1.3740. A breach of that
level will target the 76.4% retracement at 1.3945 which is also close
to the 1.4000 psychological barrier." Since we have indeed broken
through the 1.3740 level, the EURUSD is approaching the 1.3943 which
happens to be R2, followed by R3 at 1.4001. A reversal pattern such as
a 123 reversal would signal that at least a correction is due. This
week I highlight the hourly chart, which shows the dips in price
action confirmed by oscillator buy triggers. While the oscillator
won't necessarily signal a sell in an uptrend, price action will,
once we make a new high and create a 123 reversal pattern. Look for
price topping out between 1.3943 and 1.4000 but only sell on a
reversal candlestick pattern (i.e. evening star, shooting star,
engulfing pattern) or a 123 reversal.

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