Pure Guesswork

Impulsive move still seems to be working from base built in early February.

The 2.618 extension of this base formed resistance starting on Friday, February 19th. But when, after a healthy retracement, the market powered through this level last week, the target became the 4.236 extension. That is 1144. There was some minor resistance at an intermediate Fibonacci level around 1125. Friday opened above that level and went straight up from there.

A daily chart:

And an hourly chart showing the markets interaction with Fibonacci resistance levels in more detail.

30 min chart showing a minor impulsive pattern. First objective (1.618) met around the beginning of European session. Higher target at the 2.618 level, around 1.3745.

UPDATE--Noon, NY time
2.618 FIbonacci target achieved,
A 10 minute chart.

Looking at action this week in light of the long term Fibonacci pattern we have been watching.
First a weekly chart showing the 3 wave upward correction since last Spring, with the impulsive pattern in the C wave.

Then looking on a daily chart at the decline since the impulsive top above 1.51. Internal Fibonacci levels (internal to the impulsive move rather than the entire move) proved useful judging temporary support levels on the way down, specifically the 38.2% and 48.6% levels.

But the 61.8% level did not provide support. We powered through it last Thursday and traded as much as 150 pips below it on Friday. But what we also saw on Friday was signficant price rejection when the market tried to move below the 1.36 handle. Since then we have traded up above that Fibonacci level--at one point by over 100 pips. This raises the possibility that the market will treat this level not as support or resistance, but as a center of gravity for a sideways range trading period.
An 8 hour chart:

But eventually -- especially since the 61.8% level was broken -- we could see a move towards the 78.6% level.

Last night we broke through a key Fibonacci support level around 1.3730. The break has not been that drastic (so far) and if we manage to close the week out above it, we could see this level come into play as genuine support. This happened in late December when the EURUSD broke below a support level around 1.4260 but then recovered and held that level for about 3 weeks.

These Fibonacci levels derive from the internals of what was a long term impulsive move from late March of 2009 to the highs in late November of that year. This enitre move can be seen as the third wave of a classic 3 wave correction of the fall in the EURUSD in the 2nd half of 2008.

Concentrating on the last or "C" wave, we see an initial base built, with a high at 1.3737 in March of last year and a subsequent pullback to 1.2884 in late April. Using that base as a measure we could project an impulsive move which would equal 2.618 times the length of the pullback from 1.3737 to 1.2884. That target was 1.5117.

We surpassed that level by a few pips (approximately 30) in intraday trading, but we never had a weekly close above it (in fact, we never managed to have a weekly close above 1.50).

Looking at that last impulsive pattern (rather than the entire move from October 2008 low to November 2009 hight), we find on a daily chart that support in this current downturn has come at internal Fibonacci levels of that impulsive pattern.

Seen in greater detail on an 8 hour chart:

And on a 4 hour chart:

I believe that if today's adventures lead to a recovery above that area around 1.3730 we could see that level come into play as (at least temporary) support, much as happend at the 1.4260 level back in late December of 2009. We tried about an hour ago and failed. Very likely the market will try again.

A further update on a pattern noted last Wednesday, January 6, and yesterday.

Once again the AUDUSD has bumped up against resistance around the 0.9326 level, the high which was made in late October.

This is the second time this week that an attempt to break this level has found sellers. This can be seen in greater detail on an hourly chart:

I would suggest that this level around 0.9320 -- 0.9330 is a more important resistance level than the higher high which was made in mid-November around 0.9400. The November high, though higher by 70 pips or so than the October high, was part of an irregular correction. The October high was the culmination of an impulsive move which I believe leaves a deeper psychological imprint on the market. If today or tomorrow the AUDUSD succeeds in breaking through that 0.9326 level in a convincing way, I do not believe the 0.9400 level will provide serious resistance. If, however, we see more downside action today, the notion that we are forming a significiant head and shoulders pattern in the AUDUSD should be taken more seriously.

Going back to a post from a week ago, there were these chart showing an impulsive move up and a 3 wave correction to this move.

And:
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Since that time the rally from the end of the 3 wave correction carried on rather convincingly until it got to the level of the initial impulsive top (from late October of last year). It found convincing resistance there.