EURUSD--Wednesday, February 10, 2010
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.
