From the close last Friday at 1.3275 to the close this week at 1.2749 the Euro lost 526 pip vs. the USD. The range for the week covered a distance of 558 pips indicating strong selling all week as the pair nearly opened on its weekly high and closed on its low. As mentioned in last weeks post the pair was in the midst of a resistance region, and ultimately could not get through the upper end of it (1.3400). EUR\/USD Daily – FreeStockCharts.com
The aggressive, or secondary, upward trendline was broken early in the move, at 1.3150. The breakdown of that trendline indicates a test of the primary trendline which currently runs through 1.2700. Support at that level will keep the Euro uptrend intact, penetration of it indicates that the Euro rally is over and the longer term downtrend will continue.
A drop below 1.2730 is the first indicator of lower rates and a test of 1.2700. This will put the rate below the previous swing low (see daily chart) nullifying the uptrend. Below 1.2700 support comes in between 1.2520 and 1.2500. This is the target for a drop 1.2700.
The average span of prices we see in a week is 391 pips (based on 14 week average). Therefore the target is well within what could be seen this week.
On the upside, movement up through 1.2900, 1.2950 and 1.3000 would progressively cause further rallies. More solid resistance is expected between 1.3100-1.3150.
Keep in mind the short-term is down, longer term uptrend remains in tact – barely.
Chart below…
Cory Mitchell, CMTVantagePointTrading.com
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