EURUSD--Monday, January 4, 2010
The same pattern noted in the last few posts of 2009 (here and here). As noted in the first of the two posts (from December 11), I first suggested the possibility of this fibonacci impulsive pattern in September.
The pattern is simply this, an alpha-beta base was built in the Spring. The alpha high on March 19 at 1.3737 and the beta low at 1.2884 on April 22 formed the base. Projected impulsive targets for this base would be 1.4264 (1.618 times the base) and 1.5117 (2.618 times the base. Minor levels would be 1.3969 (1.272 times the base) and 1.4639 (2.058 times the base).
And here is how the pattern played out. A weekly chart:
The actual top on November 26 was 28 pips above the theoretical target, fairly close (within 1.2%) when considering it was a move of over 2200 pips.
As shown in the December posts, once the retracement from the late November high began, the natural place to look for support to come in was at the 1.618 target (1.4264). It reached that target on December 18 and, while it traded below it a few days later, there proved to be no further downside energy in the move.
It rallied above this level in the thin year end trading, came down to test it again on December 30, rallied again, and then, in early Asian trading this morning, tested it again. Once again we have rallied sharply from that support level ( on positive European data).
An 8 hour chart (showing the position right before US open this morning:
