EURUSD--Monday, March 16, 2009
Some quick charts to try to get some perspective.
First a weekly chart showing an impulsive downward move from a base built last September. An alpha-beta base between 1.38978 and 1.4865 projected a delta 2.618 target of 1.2282. In the last week of October the eurusd bottomed around 1.2328.
This can be seen as one completed pattern going back to the summer 2008 high above 1.60.
Following this was a 3 wave corrective move upwards, with the last wave very extended, ending in December. This was greatly influenced by traders trying to push eurgbp up towards parity under thin year end conditions. When that eurgbp run failed, the eurusd rally did as well.
There then followed another impulsive move down from an alpha-beta base built in early January between 1.3310 and 1.3798. This projected a delta 2.618 low around 1.2520. The low on February 18th was 1.2512.
Which brings us to the question, what has been happening since that February 18th low?
One possibility is a three wave correction, with a slightly irregular Y (or B) wave.
If Z had equaled X, the current rally would have faded out around 1.2930. That obviously did not happen. Instead it has (so far today) topped out at approximately 1.272 times the distance of the original X wave (around 1.3060).
Yet it is unlikely that the rally in eurusd will come to an end as long as the current equity rally continues. Both are risk acceptance trades. So if this pattern is at all valid, it would not be out of the question to propose a target for this current rally around 1.3225. This would make the Z wave 1.618 times the size of the X wave.
