EUR/USD: The sharp pullback below the July lows and establishment below the 200-Day SMA solidifies the prospects for the carving of a major lower top on the monthly chart which now ultimately projects additional declines down towards the 1.2000 area over the coming weeks and months. The latest inter-day rally off of the 1.3500 area lows has stalled out within our projected lower top region between 1.3835 and 1.4055 and Thursday’s break back below 1.3500 confirms the lower top at 1.3940 and should accelerate declines down towards 1.3000 over the coming days. Still, with daily studies looking slightly stretched, look to sell into a rally towards 1.3700 rather than attempting fresh shorts on downside breaks. Ultimately, only a close back above 1.3940 delays outlook and gives reason for pause.
I agree with your analysist that the market will press EUR to lower level at 1.3000 as strong support, but maybe test first on 1.3150 and after break will be down toward 1.3000. As the natural law, if you jump up or fall off to fast which counter power will be work about 40 - 50 % with steep degree below 40 % but if more 60 % the pullback will be 75 - 125 %. So, I think the market can be rebound after hit 1.3150 to be the top rebound at 1.3935, but if down to 1.3000 the top rebound is at 1.3750-1.3850 on weekly chart. And finally the monthly chart will dominated and will be going to crash on 1.3000 and goes to 1.2850-1.2950 oe maybe on 1.2750. And the lowest base on monthly chart to make a base leg is on 1.9250 - 1.2000, you are right. This process is like slow snow balling effect to go down on not steep hill with slowly down to the lower attitude that down for 300-400 points and rebound 150-250 points. The market still aware and worried about Greece, Ireland, Portugal, Spain and Italy debt crisis that maybe long period healthy treatment. Meanwhile the US economy still slow down and of course the US income will be reduced and want to be a new debt even Obama want to hike the richman tax but not significant to raise the income from taxes. Maybe much corporate in real and financial with soon possible to switch their base business for the emerging market. So, in my opinion, the Fed will force to give program QE as much USD 750 - 900 Billion ta make a strong generating power to move up the economy and give much more confident for investors in fianncial market. This is make investor switch their investing in stocks and commodities to USD, JPY, Yuan and Rupee. But if the Fed want to give QE3, the EUR will be rally for 1.5000-1.5250. This make market waiting (praying) for this. Thanks a lot for this valuable analysist, Gbu.
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