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Home Forex System Forex Signals Forex Strategy Forex Trading Software Forex eBooks Free Articles Forums Economic Calendar Contact Forex Market Commentary Archive 09/28, 2007 Longer term, the EUR/USD pair is still apparently working on a wave Wave 5 Impulse structure from the 2006 low, which could be near it's termination point. One possible target is the L1 DGL (Dynamic Gann Level) line on the daily chart. One of the reasons for this bearish mid & longer term view, is the situation in the USD Index with RSI 25 about to enter oversold territory and at the same time also tracing out a bullish divergence vs. the new monthly low in this index. The USD is also soon testing important trendline support, a line drawn through the 1998 and 2004 lows. The outlook for a stronger Dollar against the Euro, could mean weakness ahead for the EUR/USD pair, once the wave 5 has ended. Brand New Forex System by Master Trader Frank Lim. Simple & Profitable, or your money back. 09/02, 2007 After completing a five wave structure in July, daily EUR/USD rates broke out from a Rising Wedge looking pattern in August and has just made a snap-back move towards this broken wedge line, a typical reaction seen after such breakouts, before possibly resuming it's overall new trend lower. In addition, Cycle10 holds on to it's bearish mode, despite this snap-back move higher. An entry into the wedge again, would negate this scenario. 07/27, 2007 Daily EUR/USD rates have oscillated higher within a Rising Wedge looking pattern from 2006, a structure which once ended, usually breaks to the downside. The wedge support at 1.3580 will most likely be tested next week, because Cycle10 has just started a new downside pressure phase. A daily EW chart, shows that this pair has just completed a minor five wave impulse structure from June this year and with it, also terminating a higher degree wave 5. So odds are good this pair is facing mid & long term weakness. This view is supported by the Double Bottom and bullish divergence forming on the USD Index monthly chart. 2006 09/29 Another Inside Week (range within previous week's range) is observed in the EUR/USD pair, which reflect indecision among currency traders. The directional breakout from it, as signaled by a break of the previous week's high (1.2833) or low (1.2630), could set the tone for the weeks thereafter. The Bollinger Bands still holds on to it's contraction (low volatility) mode. 09/01 An Inside Week in the EUR/USD pair, as it traded within the range of the previous week. Inside weeks reflect market indecision. The directional breakout from it could set the tone for the weeks thereafter. So a break of the 08/25 weekly bar high (1.2941) would signal a bullish breakout, while a break of the low (1.2725) would be a bearish one. Given the strongly contracting Bollinger Bands, an explosive move could be near. 08/25 Several technical factors indicates weaker EUR/USD rates ahead, in my opinion. Any break of the Hammer low would confirm a top in place. A weekly close above trendline resistance, would instead mean a breakout to the upside, thus used as stop loss area. 08/04 First, i have a special trading report for you. A few weeks ago a trading friend of mine Mark McRae asked his clients and subscribers to complete a survey. He called it the "Monster Trading Plan Survey." As Mark put it, "the survey has turned out to be a turning point in my relationship with my clients and subscribers." Over 1000 traders completed this survey and I can tell you that the questions asked were revealing and startling in some cases. I have just read it and I can tell you right now that he could have easily charged for the information inside this report. I got special permission from Mark to give the report to my subscribers. You can get a copy here: http://www.surefiretradingplans.com/specialreport.html I think there are some valuable lessons to learn from reading this report. It is a very interesting read. ---------------------------------------------- The bullish signal (blue dot) generated over 1/2 a year ago is still intact, as of the end of the first week of August. Weekly EUR/USD rates tested important trendline resistance this week. If overcome, the next trendline challenge is around 1.3040. Weekly momentum should be in overbought territory at that point, so a top is looked for then. A larger Double Top scenario forming from Spring is not out of the question, given what looks to be a bearish divergent pattern in momentum. Near term, lower rates are in the cards, as suggested by the early stages of a downside pressure phase in Daily Cycle10 and this week's failure to overcome trendline resistance, which makes the EUR/USD pair vulnerable to fall back for support. From an Elliott Wave point of view, the structure developing from the Nov. 2005 low could be the five wave impulse type, with the wave 3 part of it completed in Spring this year and currently going through a complex wave 4 corrective phase. Once a wave 4 is completed, the last wave 5 of this potential impulse structure should take rates up for a test of the Spring highs. 06/02 After a few weeks of weakness, the EUR/USD pair recovered this week, closing near it's recent weekly highs. Any break above 1.2974 (May high) could signal even higher rates ahead. Another possibility is a Double Top forming, supported by the lack of back-up from Stochastic momentum, despite the strong positive close in rates. The daily chart shows that rates are climbing higher within a channel looking pattern. From an Elliott Wave angle, it could be a wave v underway, the last one in wave 3, one degree higher. If so, a potential wave 4 coming could mean a calmer market, as wave four's often turns into complex, sideways patterns, with a downside bias. 05/12 Because the EUR/USD advance overlapped the Feb. 2005 low earlier in May, the Elliott Wave 4 scenario from the Nov. 2005 low has been excluded from the list of valid counts. This indicates the weakness from Dec. 2004 to this low was a larger a-b-c correction, with an impulse structure now underway to the upside, currently working on the wave 3 part. A look at the EUR/USD Weekly chart, shows that the two latest trading weeks have formed a "railway track" pattern (as Peter Bain would have called it) which often indicates a top in place. This is supported by the quite overbought Stochastic which turned bearish this week. In addition, a trendline from Nov. 2005 and the key (61.8%) Fibonacci retracement level, (of the Dec. 2004 - Nov. 2005 decline) was recently tested but rates failed to break through, as seen on this daily chart. Tops and bottoms are often seen at these key retracement levels. Near term, a brief reaction to the upside is not ruled out, given the bottoming Cycle10. 04/28 An explosive move from the Feb. low has brought EUR/USD rates near it's 50% retracement level, (1.2650) of the Dec. 2004 - Nov. 2005 down trend. This could be the wave c part of an a-b-c zig-zag wave 4 structure underway from the Nov. 2005 low. Wave c's are usually quick and sharp in nature. But it should not overlap the wave 1 low (Feb. 2005) at 1.2729, to remain a valid wave scenario. If an overlap occurs, odds are good a full five wave impulse structure from Dec. 2004, already ended at the Nov. 2005 low. In this case, a larger three wave corrective pattern would be moved to the forefront of likely wave counts. As this pair closed near it's high for the week, even higher rates are looked for next week, at least intra-week. Short term, the quite toppy daily Cycle10 condition, makes a pullback from the 50% retracement level likely. If this resistance area is ignored (daily closing basis), it may go for the key (61.8%) retracement area right away, before a top could be in place. 04/21 Now that the EUR/USD pair has overcome the January high, the wave 2 scenario from the February low is now excluded from the list of valid counts, as a wave 2 cannot retrace more then 100% of wave 1, to remain a valid interpretation. However, a larger degree wave 4 structure underway from the Nov. 2005 low, still remains a likely and valid wave count, as long as an overlap of the wave 1 low (Feb. 2005) is not seen. So it could be a series of minor a-b-c zig-zag patterns or one large one, developing from the Nov. 2005 low, which should sooner or later end in a wave 4 peak. A look at the USD Index isolated, shows that trendline support and the 50 moving average has just given in to bearish forces. A weaker dollar could lead to even higher EUR/USD rates. But a toppy Daily Cycle10 indicates some near term weakness first, before possibly resuming it's overall positive trend. Strong channel support comes in at around 1.2200. 04/07 The EUR/USD Weekly made an explosive break out from the recent indecision to the upside, nearly violating the Jan. high, intra-week, as a result. Despite the strong move in rates, it was not backed up by Stochastic readings, forming a bearish divergence. As long as the Jan. high stays intact, a minor wave 2 or b from the Feb. low is a likely wave count. This daily chart suggests that the new trading week will start with some weakness, given the downside pressure from Cycle10. At least a test of trendline support is likely, which comes in at 1.2150. If it fails to hold, another trendline is at around 1.2080. 03/31 Another Inside Week in the EUR/USD pair, for the second week in a row, trading within the previous week's range. The longer this market indecision continues, the more explosive the breakout could be. The directional breakout from this condition, is signaled by a violation of the previous week's high (1.2197) or low (1.1953). Using daily closing rates only, this daily chart shows the potential for a positive start of the new trading week, given the current Cycle10 upside pressure phase and trendline resistance not yet reached. Any daily close above it, would increase the odds of seeing an upside breakout from the indecision in weekly rates. 03/24 The EUR/USD failed to break through the previous week high, thus it never signaled further advance. The trading range coming within the previous week's range, formed a so called Inside Week, which reflect market indecision. The directional breakout from this indecision, would indicate where this pair is heading in the week(s) thereafter. The directional breakout is signaled by a violation of either the high (1.2208) or low (1.1911) of the previous week's bar. Since the Jan. high remains intact, an overall wave 5 impulse structure underway to the downside, is still a valid Elliott Wave interpretation and would ideally test the Nov. 2005 low, before ending. If so, a larger Double Bottom could then be a fact and could be quite bullish for this pair, mid term. Especially if bullish divergences shows up in weekly momentum indicators at that point. Near term, rates have reached key Fibonacci support (61.8%) which also happens to be near trendline support, as seen on this Daily Chart. As Cycle10 has entered it's buy zone, a reaction up from this support area is then a likely scenario. Any daily close below it, could open up for more weakness though. 03/17 The EUR/USD found support on the daily trendline and recovered strongly this week. The weekly chart shows that the close was near the high for the week, which could be a positive setup for the next trading week. A break of the weekly high (1.2208) would signal even higher rates, although the upside potential could be limited, as the upper Bollinger Band resistance area is reached. An advance beyond the Jan. high (1.2326) would negate the current preferred wave 5 scenario, possibly underway from that high. A wave 5 would most likely test the Nov. 2005 low, before a completion is considered. If the Jan. high is broken, several alternate wave counts comes to the surface. I.e. it could mean a full five wave impulse structure from Dec. 2004 already ended at the Nov. 2005 low, with an a-b-c corrective zig-zag pattern now underway to the upside. More on this later, if the Jan. high fails to hold. 03/10 After reaching the 50% retracement area (of the Jan. - Feb. decline), the EUR/USD made a pullback and is probably going to test daily trendline support, before a near term reaction to the upside is likely. Mid term, the overall bearish trend from early this year seems intact, also indicated by weekly Stochastic, still in bearish mode. If the current preferred wave 5 count is going to work out correctly, we ought to see a test of the Nov. 2005 low, possibly forming a larger Double Bottom. Weekly momentum bullish divergences at that point, would increase the odds of such a scenario, which could be quite bullish for this pair. 03/03 The EUR/USD pair briefly violated the pivot (Hammer) low made 2 weeks ago, before recovering strongly and closing near it's week high. This setup portend even higher rates next week, signaled by a break of this week's high (1.2055). Bollinger Band resistance comes in at 1.2200, if Fibonacci resistance on the daily chart is ignored. 02/24 Although briefly, EUR/USD rates broke the weekly Hammer high discussed in the previous update, before resuming it's bearish trend. If daily trendline support gives in to the bearish forces, a test of the weekly Hammer low would be a likely scneario, next week. If broken, then this pair may go for a test of the Nov. 2005 low, in line with the current preferred wave count. If a bullish divergence shows up in momentum indicators at that point, it could be a powerful setup, given the Double Bottom scenario, mentioned earlier. 02/17 After a brief reaction up from the key Fibonacci retracement support, daily EUR/USD rates continued on it's path lower. Daily MACD catched most of the decline from the Jan. high and is still in bearish mode. However, now that the first 37.5% Fib & DGL (L1) support is reached and given the bullish reversal bar formed on the weekly chart, odds are good an upside reaction is in the cards for the next trading week, signaled by a break of the reversal bar high (1.1957). The overall dominant trend from the Jan. high should remain bearish though, given the last Wave 5 impulse structure underway from that high, is a correct interpretation. A wave 5 would at least make a Double Bottom with the wave 4 low and can even go slightly beyond this low. Double Bottoms are often powerful bullish patterns, especially if bullish divergences at the same time shows up in momentum indicators. 02/10 The EUR/USD pair broke out from the bullish channel this week, increasing the odds of the last wave 5 underway to the downside, as part of a five wave impulse structure from the Dec. 2004 high. Wave 5's can end in double bottoms or a move slightly below it's wave 3 lows. So mid term, a test of the Nov. 2005 low is not out of the question, if this wave count works out. Short term, using daily closing prices, this pair has just reached strong trendline support, which is right below the 50% retracement area. With a bottomed out Cycle10 at the same time turned bullish, chances are good to see a reaction up from this support, next week. If this support fails to hold, it would open up for even more weakness, towards the Nov. 2005 low. But i would be surprised if not a rebound from either the trendline or the key (61.8%) Fibonacci retracement area occurs first. Speaking of Fibonacci, in technical analysis the proportion of Fibonacci has three basic percentages as its foundation: 1. 38.2% 2. 50% 3. 61.8% By using this new proprietary ProfinacciTM Calculator, you'll be able to plug in the highs and lows, and effortlessly calculate the Fibonacci Retracements for the Forex and other markets. 02/03 The EUR/USD closed down this week, after giving a Hammer reversal warning in the previous one. The weakness resulted in a Stochastic bearish mode. Given it's overbought condition, more mid term weakness is not ruled out, possibly after a near term reaction to the upside first, because of the bottomed out Daily Cycle10. The low for the week was caused by the Bollinger Bands MA support and also trendline support. 01/27 The EUR/USD broke out from the Inside Week to the upside and penetrated the upper Bollinger Band before pulling back. This area also represents channel resistance. The pullback and close near the low for the week, formed a Hammer candlestick, which is often found at turning points in the market. And given weekly Stochastic's overbought extreme, odds favor some weakness in this pair, signaled by a break of the Hammer low (1.2084) and a Stochastic crossover. This bearish stance is also supported by the technical situation on the daily chart with Cycle10 in the early stages of a downside pressure phase. First Fib. support (of the Nov. 2005 - Jan. 2006 advance) comes in at around 1.2050. 01/20 Taking the high-low range 3 weeks ago into account, this was another Inside Week, still indicating indecision in the EUR/USD currency market. The Bollinger Bands for this pair have started a contraction phase, which often means an explosive move is around the corner. The direction is less certain though. A clue would be a violation of the high (1.2182) made 3 weeks ago, this could mean a sharp move is coming to the upside, with the upper Bollinger Band as a minimum target. Key Fib. resistance (61.8%) of the Sept. - Nov. 2005 decline, is at 1.2215 and must be overcome first. Additional support in favor of a positive breakout view, is the early stages of an upside cycle pressure phase in Cycle10, as seen on this daily chart. Any break of the recent weekly lows, on the other hand, would signal weakness in the weeks thereafter, given the now overbought weekly momentum. Although a bit early discussing at this level, the Doji candlestick formed 4 weeks ago is a pivot point. If the low is broken, it would indicate a re-test of the Nov. 2005 lows. 01/13, 2006 An Inside Week in the EUR/USD pair, as the trading range came within the previous week's range. This reflect indecision in the market. So any violation of the previous week's high (1.2182) would signal a positive breakout from this indecision and a resumption of the overall bullish trend from the Nov. 2005 low. A violation of the low, on the other hand, would signal some weakness ahead. A test of the Nov. low is not ruled out, in this case. A mildly overbought weekly Stochastic is holding on to it's bullish mode, despite the down close in rates. A look at the daily chart shows that Cycle10 is in the early stages of a downside cycle pressure phase. First Fib. support comes in at around 1.1970. 01/06, 2006 The EUR/USD managed to overcome strong trendline resistance and made a convincing close above it. The close near the high for the week, is a positive indication for the next trading week also, signaled by a break of this week's high. This bullish view is supported by Stochastic at mid readings, thus it has yet to reach an overbought condition, mid term. On the daily chart one can see that the 50% retracement area (of the Fall high - Nov. 2005 low) is touched, with Cycle10 at the same time getting toppy. So near term, a pullback from this or the key 61.8% Fib. retracement zone, is not ruled out. Comments posted in 2005 |
Copyright 2004 and beyond... Forex Trading Resources - All rights reserved.