Pure Guesswork

The short term impulsive move late last week hit a 6.854 (phi to the 4th power) Fibonacci target:

This morning it has fallen back to the region of the 2.618 target level (1.4010). For most of the morning prices have cycled around that region, with support at the next lowest minor Fibonacci level (1.3979) and resistance at the next higher minor level 1.4048.)

Notice how price action this morning has been distributed around that level.

We've traded down in the last 30 minutes or so to that lower bound. Then back to the 1.4010 level. It looked like that level was going to become resistance rather then a center of distribution, but then the "pledge of support" from China hit the wires. Still believe 1.4040 to 1.4050 is a good area for a fade, if we get there.

Posted by Pure Guesswork at 9:11 AM | Permalink | TrackBacks (0)

An update to a pattern noted in this post from October 12.

From that date until last Friday we traded around the Fibonacci target at 1.3787 (the 2.618 extension of the base). Last Friday we began a genuine probe higher, putting the next target, 1.4051, in play.

A 4 hour chart:

A 30 minute chart shows the internal Fibonacci dynamics of the area between the two successive targets. Notice how we have gotten 61.8% of the way to the 4.236 level at 1.4051 and there found resistance. The 38.2% level provides support as we cycle around the half way level.

And for those who think these levels arbitrary, here is a distribution of price action since October 12. Notice how it has been distributed around the 1.3780 level (the 2.618 target), with a bias to the upside.

Posted by Pure Guesswork at 12:45 PM | Permalink | TrackBacks (0)

Target was 2.618 Fibonacci level roughly around 1.3790. We achieved that this morning with a little to spare. There is the possibility that just as price oscillated around the 1.618 level for a few days, the 2.618 level could provide a pause rather than final target. If that were to be the case, the next target in a continuing pattern would be around 1.4050, the 4.236 Fibonacci level.

Posted by Pure Guesswork at 6:47 AM | Permalink | TrackBacks (0)

Posted by Pure Guesswork at 10:32 AM | Permalink | TrackBacks (0)

In this impulsive move down, the area between the 1.618 and 2.618 targets was a gap on Sunday night. The 4.236 target was the level where the move ran out of steam. Since then counter moves have had difficulty spending any time in that gap between the 2.618 and 1.618 levels.

Posted by Pure Guesswork at 6:59 AM | Permalink | TrackBacks (0)

Posted by Pure Guesswork at 6:29 AM | Permalink | TrackBacks (0)

Say goodnight, Gracie?

Posted by Pure Guesswork at 2:35 PM | Permalink | TrackBacks (0)

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Posted by Pure Guesswork at 6:22 AM | Permalink | TrackBacks (0)

Is this too simple?
A - B - C.
B retraces 61.8% of A, then the C wave fades at the 161.8% extension of the A.

We could get only slightly more complicated with this chart.
Projecting the length of the A wave from the bottom of B, the fade is around the 127.2% mark.
And it leaves us open for a surprise move to 1.4160 and a new fade there.

Posted by Pure Guesswork at 7:51 AM | Permalink | TrackBacks (0)

Exhausted yet, euro sellers?

An impulsive pattern where there was some support at the 4.236 extension.late Thursday, before Friday's continuation of the down move. The next exponent of phi would be 6.854 (1.618 to the 4th power). Right about where we are now.

Posted by Pure Guesswork at 10:16 AM | Permalink | TrackBacks (0)

Quick update on the EURUSD charts posted on Monday. Target was 1.4950 as the 4.236 Fibonacci extension. 1.4939 printed today. Close enough.

Posted by Pure Guesswork at 11:27 AM | Permalink | TrackBacks (0)

A pattern examined previously. Fibonacci extensions at 1.618 and 2.618 from a base formed in early March first provided resistance and then support in ongoing EURUSD rally. The next exponential extension would be at the 4.236 level -- 1.4950.

Latest action shown on an 8 hour chart:

Posted by Pure Guesswork at 10:28 AM | Permalink | TrackBacks (0)

Short term patterns each showing impulsive moves ending at a 4.236 Fibonacci target.

5 minute charts:

A wave:

Then a little later, the C wave. Same 4.236 ratio hit, this time exactly.

Posted by Pure Guesswork at 11:08 AM | Permalink | TrackBacks (0)

Late Friday the EURUSD approached a confluence of Fibonacci targets--both long term and short term--at the close.

Looking at a 4 hour chart from late March:

A 2.618 Fibonacci extension of an alpha-beta base was met at 1.4248 on March 22. At the time, the possibility that the extension would continue to the next major target (4.236) was noted. The theoretical level for that target was 1.4484.

We achieved that on Friday.

Note that the initial 2.618 level provided some resistance and a subsequent sell off last Monday, but by Wednesday we were through it and it became support.

Then, looking at a shorter time frame chart from Friday (15 minutes), we see a lower order impulsive move from an alpha-beta base with an initial 2.618 extended target at 1.4403.

While the initial impulsive move ended there in the Asian morning session, it drifted higher through the European morning.

And then near the close of the NY session it spiked higher towards the 4.236 target--roughly the same as the longer term 4.236 target.

Both these patterns seem completed. Today has seen a lack of impetus for any further moves, despite the fact that sentiment in the market seems uniformly convinced that we are going higher.

Posted by Pure Guesswork at 8:55 AM | Permalink | TrackBacks (0)

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Posted by Pure Guesswork at 9:37 AM | Permalink | TrackBacks (0)

A quick chart this morning showing how we the decline in EURUSD from Tuesday's high to today's low maps out an A - B - C pattern where the length of C equals 1.618 times the length of A.

We have presently retraced about 38.2% of that entire A - B - C move. 50 % would take us to the 1.4150 area (approximately the terminus of the A wave), and 61.8% would take us to 1.4173.

Posted by Pure Guesswork at 6:43 AM | Permalink | TrackBacks (0)

This is a short term impulsive pattern built from a base developed about a week ago. The operative phrase is "short term." There are still other patterns in play which would posit higher targets.

Posted by Pure Guesswork at 10:47 AM | Permalink | TrackBacks (0)

This pattern has shown some validity, with the 1.618 and 2.618 extensions of the base providing earlier resistance. If current activity is a continuation of the same pattern, the next area of resistance should be around 1.4320, the 4.236 extension.

Posted by Pure Guesswork at 12:24 PM | Permalink | TrackBacks (0)

Possible longer term target at 1.4560

Posted by Pure Guesswork at 7:44 AM | Permalink | TrackBacks (0)

Example of a short term (5 minute chart) extended "price pulse." A base formed from an "alpha" low (around 8:00 AM NY time) and a "beta" high (about 10 to 15 minutes later). The 2.618 Fibonacci downside target from this downward alpha-beta base was 1.3990. Bingo.

Posted by Pure Guesswork at 10:39 AM | Permalink | TrackBacks (0)

Updating today's earlier post, the initial support indicated around 1.3625 has held. So far. If this were to break, we might expect the next support around 1.3590.

Posted by Pure Guesswork at 6:18 PM | Permalink | TrackBacks (0)

A few charts showing a possible target area for the current rally in EURUSD.

First a daily chart.

In this theoretical pattern, the move down last November can be seen as a 3 wave corrective pattern. An a-b-c which results in a larger scale A wave.

Since that time market action might be seen as an irregular counter move--a B to its A-- with the low a few weeks ago as a b of B. And that would put this current rally as the ongoing c wave of that B move.

There is an area around 1.3780 which would be a 61.8 retracement of the original A wave down. It also defined the end of the b wave of that move.

Now looking at a 4 hour chart we can look more closely at the internals of that theoretical c of B wave.

There seems to be an impulsive move happening to complete this c of B wave. The target--2.618 times the base--would be around 1.3765. In other words, in the same neighborhood as the 1.3780 target seen on the daily chart.

This impulsive move--and the way current moves seem to conform to it--can be seen more clearly on an hourly chart.

The 1.618 impulsive level (1.3624)--initial resistance should now provide support. The 2.618 level (1.3765) is the current target.

Posted by Pure Guesswork at 11:36 AM | Permalink | TrackBacks (0)

Following a pattern noted in a post last Friday, a level which initially had the potential for providing support has now become a level of resistance.

The 2.618 impulsive target around 1.2960 was clearly broken last Friday. Since then, although there have been probes above that level, all have proven to be head fakes. This is seen quite clearly on an hourly chart:

Quite often when a target level like this fails to define an end to a move it will, for a time, become a center of gravity for a sideways pause before the trend resumes. The trend here in EURUSD being clearly down.

Posted by Pure Guesswork at 9:58 AM | Permalink | TrackBacks (0)

Some support for EURUSD seems to be developing right above the 1.2960 level. This can be seen as a Fibonacci 2.618 level on a downward impulsive move (that intersects the completed upward corrective move detailed in the last post.) Notice how there was some initial support, after the first impulsive move down around 1.3140, the Fibonacci 1.618 level. the 2.618 level should provide more energetic support. And certainly, at this point, mid-morning Friday, it seems unlikely the market will continue to probe this downside level.

For theory's sake, to project this pattern down would find the next support around 1.2665, the 4.236 Fibonacci level.

Posted by Pure Guesswork at 10:41 AM | Permalink | TrackBacks (0)

Since the EURUSD bottomed below 1.30 at the end of November, the market has corrected upward, but without any sense of a genuine bull move. For the moment it is possible to characterize the action as a 3 wave Elliott corrective move (A-B-C), with the B wave being irregular.

The A wave tops out on December 3rd at 1.3437. Then the irregular B wave begins, with an initial low at 1.3164 on December 9th, a counter move that tops out above the initial A top near 1.35 on Dec 14th, then a final low at 1.3055 on Dec 23rd.

Here is a look at some of the internal dynamics of that irregular B (in a chart made on Monday morning when the C wave was still ongoing):

The length of the c of B wave was almost almost exactly 1.618 times the length of the a of B wave. (In fact it was about exact as it could be--442 pips,versus the 441.7 pips called for in theory.)

In a chart also made Monday morning, a C wave was projected to end around the same level as the top of the initial A wave. Using the same dynamics as the B wave (although this time it was not irreguar)----c of C being 1.618 times the length of a of C)--projected an end to the 3 wave upward correction around 1.3437.
.

The top yesterday proved to be 6 pips below that theoretical target.

Shown on a 4 hour chart from this morning:

Posted by Pure Guesswork at 9:39 AM | Permalink | TrackBacks (0)

The pattern suggested in a post last Friday has worked itself out. The theoretical target was 1.2662, The high yesterday was 1.2661. Since then EURUSD has sold off more than 100 pips.

In this chart we see an alpha-beta base formed the last 2 days of June. This would call for Fibonacci targets 1.618, 2.618 and 4.236 times this base. The 2.618 target (1.2482) was hit on July 1, then a few hours later surpassed. After that it twice proved to be support, making it more likely that the pattern would continue to the 4.236 target at 1.2662.

Interestingly, if one projects the distance of the original alpha-beta base down from the 4.236 target level--

--there is our support level this morning.

Posted by Pure Guesswork at 8:29 AM | Permalink | TrackBacks (0)

A quick look at a 30 minute chart on EURUSD, showing an impulsive "price pulse" off a base formation formed Wednesday and early Thursday.

Late yesterday we met the 2.618 target around 1.2480. The next target in this pattern is circa 1.2660.

That also correlates with a target in a (potential) higher order pattern shown in this 8 hour chart:

If this pattern proves valid, and the current EURUSD recovery continues, we would look for the following targets:

Posted by Pure Guesswork at 8:53 AM | Permalink | TrackBacks (0)

Is the short EURCHF trade too crowded?

A weekly chart shows that an impulsive downside target has been met this week. The low late yesterday around 1.3160 was the 2.618 extended Fibonacci target of a base formed in March. We have rallied over 100 pips since then. A retest of that level, if it manages to hold, might lead to some surprising upside action.

Posted by Pure Guesswork at 7:35 AM | Permalink | TrackBacks (0)

Quickly, an update on the unfolding impulsive pattern up in EURUSD shown yesterday:

The 4.236 (phi to the 3rd power) Fibonacci target was achieved on Monday. Then on Tuesday and Wednesday price action oscillated around this level before heading higher yesterday.

On this 30 minute chart one can see the internal Fibonacci levels between the 4.236 target and the theoretical 6.854 (phi to the 4th power) target. Notice how price action since the impulsive rally yesterday morning has oscillated around the 38.2% level, with upside action largely confined by the 50% level and downside action confined by the 23.6% level.

Posted by Pure Guesswork at 8:54 AM | Permalink | TrackBacks (0)

Since the bottom made just below 1.19 in EURUSD during the Asian morning of Monday, June 7, price action has been spiraling up in a quite recognizable "price pulse," involving successive powers of 1.618.
A 2 hour chart shows this:

Notice how resistance came in initially around 1.2062 or the 1.618 extension on the 9th, then around 1.2150 or the 2.618 extension (1.618 to the 2nd power) on the 10th and the 11th, and then around 1.2292 or the 4.236 extension (1.618 to the 3rd power) this Monday. The next extension would be the 4th power of 1.618 (phi), 6.854. This would bring us to 1.2523.

Curiously, EURUSD is one market which seems to favor this pattern featuring such an extreme extension, that which is measured by the 4th power of 1.618. It has happened frequently over long time periods. The rise of EURUSD from late 2000 until the summer of 2007 can be seen as composed of 2 such extreme extended moves, both measured at almost exactly 6.854 times a base pattern. These two moves were separated by the dollar bull market in 2005.

Posted by Pure Guesswork at 10:24 AM | Permalink | TrackBacks (0)

A quick update on the pattern initally displayed in a post on Monday and updated yesterday.

As expected the area right above 1.2150 provided significant resistance. This chart shows the original "base pattern" from which the downward impulsive move was projected, but transposed upward from the 4.236 Fibonacci target around 1.1894. It is this level which has provided support for the weak counter trend rally we have been experiencing this week. As predicted in the post yesterday, the internal Fibonacci levels have been predictive in determining resistance levels in this rally.

As expected the area right above 1.2150 provided significant resistance. 1.2156 was the 0.618 Fibonacci level. The high today was 1.2152 right after the NY open and we have seen significant fall back since that time.

Posted by Pure Guesswork at 8:48 AM | Permalink | TrackBacks (0)

A quick update on the impulsive pattern detailed in a post on Monday.

The pattern showed a theoretical impulsive downward target at the 4.236 Fibonacci level for EURUSD at 1.1894. The implication was that this would be--at least for a time--support. And action since that time has seemed to confirm that pattern.

On a 4 hour chart, I have projected the length of the original alpha-beta base up from the theoretical target. Notice how the last impulsive move down was roughly equivalent to the length of the original base. And since the low during the Asian morning on Monday, price action initially stayed very close to the theoretical target, seemingly confined within a region bordered by the 0.236 Fibonacci level (within the projected base. Then yesterday we rose to a region around the 0,382 level. Since this chart was drawn we have risen above the 0.50 level. Do not be surprised if we find serious resistance around 1.2156 and 1.2318, levels equivalent to 0.618 and 1 times the original base level projected up from the theoretical support.

And one last chart, just to emphasize that the action since support held early Monday morning has not exactly been overly bullish. So it might be wise to consider a further downside target if and when this counter trend move ends. That target might be the next power of phi down--6.85 times the original base. That would take us to the region around 1.08 or a little lower.

Posted by Pure Guesswork at 9:49 AM | Permalink | TrackBacks (0)

Quickly, a few charts showing an impulsive pattern on the downside, with a 4.236 extended Fibonacci target near today's lows (from which we have bounced nicely). Notice how the previous target (2.618) first provided an area of support, and then, once broken, resistance.

First, a daily chart, showing only the major impulsive downside targets, from a base formation completed in April.

Then an 8 hour chart showing some minor Fibonacci internals within the larger targets.


Look for upside resistance near the initial high today (around 1.1990--1.2000), then at 1.2055, 1.2105 and major resistance at 1.2155.

Posted by Pure Guesswork at 8:09 AM | Permalink | TrackBacks (0)

A relief rally today. How long will it take market participants to come to the conclusion that there might not be much to be relieved about in the EC deal struck yesterday?

Following the extended Fibonacci pattern shown in this post from a week ago on a daily chart.

After trading for about 6 weeks in a sideways range which centered around the 2.618 extended target (1.3631), we now seem to be en route to the 4.236 target in the general vicinity of 1.3045.

Looking at a 2 hour chart, we can see that the bounce last night came right as 61.8% of the distance between the two targets was met. So far today the rally seems to be finding resistance at another Fibonacci level, 38.2%.

Above this level we have an area that provided support three different times during that long sideways move from early February until the recent break. This level, around 1.3430 to 1.3450, should now form solid resistance.

Posted by Pure Guesswork at 11:04 AM | Permalink | TrackBacks (0)

Despite all the negative chatter about the Euro, the last six weeks has seen basically sideways action, with price distributed roughly around 1.3620.

Repeating myself, I must emphasize that this equilibrium level, what would be referred to as "the point of control" in MP, is basically the target area of an impulsive move

The impulsive move and subsequent sideways action seen in a daily chart:

An 8 hour chart shows sideways action around the 2.618 target level. Notice that during that period we quickly found resistance at the next minor Fibonacci level above (2.058). This week's rally failed beneath that level.

Daily price action since February 5 (the last 31 trading days) has focused on a level of 1.3620 to 1.3630.

The important thing to bear in mind is that when an extended Fibonacci target in an impulsive move does not end up being a limit of that move, but rather becomes a center of gravity for subsequent sideways action - as this 1.3631 level has become - more often than not the impulsive move will be continued. This would imply further downside action in EURUSD, with a new downside target around 1.3045.

Posted by Pure Guesswork at 8:47 AM | Permalink | TrackBacks (0)

Posted by Pure Guesswork at 12:24 PM | Permalink | TrackBacks (0)

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.

Posted by Pure Guesswork at 11:08 AM | Permalink | TrackBacks (0)

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.

Posted by Pure Guesswork at 10:04 AM | Permalink | TrackBacks (0)

Eurusd rally faded at the 1.272 level (that is, 1.272 times the distance from the previous high on 1/5 to the low on Friday).

Almost certainly this is a temporary set back for a move to at least 1.46.

The risk trade or carry trade or whatever other appelation you want to put on this mindset is back on. The spectre of early CB tightening has receded with Friday's bad job number. Yet there seems something unconvincing about this return to risk. Like someone who has begun to sober up but then changed his mind and started drinking again. Unfortunately what usually follows is not a return to euphoria but a rather bad headache.

Posted by Pure Guesswork at 10:08 AM | Permalink | TrackBacks (0)

The Fibonacci pattern most recently noted in Monday's post, proved operative again this morning as EURUSD bounced at the 1.4260 level right as the employment numbers were released.

This level was the 1.618 Fibonacci target on the way up from April through November. Once the rally ran out of energy in November around the 2.618 extension, this lower target level became an area of support.

Shown on a weekly chart:

On a 4 hour chart one can see how the bounce this morning came right on the 1.4260 level:

What is significant is not that the EURUSD rallied on the bad employment number, but rather that before the number came out, the market was unable to break through that 1.4260 barrier. Despite all the bullish talk in the market before this number came out--all the talk of early Fed moves, of wildly positive employment numbers, etc.--every time EURUSD approached this 1.4260 level in the past few weeks, sellers have disappeared. This morning was only the latest example of this.

Posted by Pure Guesswork at 9:10 AM | Permalink | TrackBacks (0)

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:

Posted by Pure Guesswork at 7:26 AM | Permalink | TrackBacks (0)

Updating the pattern shown on the previous post, support seems to have kicked in for EURUSD around the 1.618 level of the impulsive move up. This corresponds with a 38.2% retracement of the impulsive wave up (i.e., from the beta low to the 2.618 delta target).

This support level seen in ever increasing detail.

A daily chart:

A 4 hour chart:

And a 1 hour chart:

Posted by Pure Guesswork at 11:22 AM | Permalink | TrackBacks (0)

An impulsive pattern first explored in a post in September, which called for a 2.618 extended target above 1.51 seems to have completed itself. The theoretical target was 1.5117. The actual high on November 27 was about 30 pips north of that.

Here is the pattern:

And here it is stretched that 30 or so pips towards the actual high:

Notice how support originally came in around a minor Fibonacci level of 2.058, or 0.786 of the entire impulsive move from the beta low. But there was no appreciable bounce off that level. And at the moment that level might be giving way.

An 8 hour chart:

Posted by Pure Guesswork at 9:17 AM | Permalink | TrackBacks (0)

A former bank trader was the first person I ever ran into that used the ratio 1.272 as a Fibonacci level on charts. When I asked him what the signficance of this level was--i.e., how it fitted in with the other Fibonacci ratios, he said, "I dunno. I just know that they like that level in bank trading rooms. So I like it too."

And so this happens:

A 5 minute chart of EurUsd as of 12:49 PM EST today.

We arrive at 1.272 (based on the first wave down). All together now, take profits and fade

(And to solve the mystery. . . just square it.)

Posted by Pure Guesswork at 12:55 PM | Permalink | TrackBacks (0)

On a 2 hour chart, an irregular A-B-C correction beginning on October 28 and ending with yesterday's high. Taking the length of the A wave was 176 pips. Multiplying that length by 1.618 produces a value of 284.768. Round that up to 285 and add that to the November 3 low at 1.4625 produces a C wave projection of 1.4910, 2 pips north of yesterday's high.

The pattern shown on a 2 hour chart:

A 30 minute chart shows the impulsive character of the C wave, The alpha-beta base is formed on November 3, with a high at 1.4696 and a subsequent low at 1.4630. The rally is tentative at first, fading below the 1.618 initial target, but keeping above the alpha level. Once it moves through the 1.618 level it gravitates to the 2.058 minor Fibonacci level, then retests the 1.618 level. The truly impulsive part of the rally begins after that level is tested and holds. The market rallied through the 2.618 target area, paused for a few hours just below another minor Fibonacci level (3.330), then moved quickly and somewhat erratically up to the 4.236 target level. Again, the top came within a pip or two of the theoretical target.

Posted by Pure Guesswork at 7:46 AM | Permalink | TrackBacks (0)

A comparision of the rate differential between 2 Year US Treasuries and Bunds. From June 2008 until March 2009 the spread narrowed. As this happened the euro topped out, and then declined. When that trend ended and we had a relatively flat relationship between the yields of the two, the euro began to rally. The question is how long this can continue if the spread does not begin to increase again. The rate advantage of the 2 year Bund now is scarcely 25 basis points. The last time the euro surged above 1.50, the rate advantage was well over 100 basis points and rising.

Posted by Pure Guesswork at 12:03 PM | Permalink | TrackBacks (0)

A brief update on the pattern we have been watching: a base formed in March and April between 1.3737 and 1.2884, projecting an impulsive move above 1.51.

Seen on a weekly chart:

A daily chart shows how the initial breakout above the top of the base initially spiked above the 1.618 Fibonacci level, but then seemed to oscillate first around the 1.272 Fibonacci level, and then the 1.618. Then recently it broke out again above the 2.058 minor Fibonacci level.

This 2.058 level, once broken, has provided support. I had mentioned in earlier posts describing this pattern that this support might be broken and then the level--roughly around 1.4640--would become the center of gravity for further sideways oscillation. Yesterday it was--very briefly--broken. But as a 4 hour chart shows there seemed to be no serious offers below this level. It was a spike low and this morning's European session has seen a breakout to a new high for this move around 1.48.

Whatever talk there is in the market of an oversold USD, there seems very little evidence in market action of any conviction underlying such talk. For the moment, selling dollars is still the path of least resistance.

Posted by Pure Guesswork at 6:47 AM | Permalink | TrackBacks (0)

An update on the pattern noted last Friday, an impulsive extended move working out of a base pattern formed in late March and April. The top of the base (alpha) was formed on March 19th at 1.3737. The beta or bottom of this base pattern came roughly a month later (April 22) at 1.2884.

A classic extended 2.618 target for this pattern would be 1.5117.

So far the pattern has developed as follows (weekly chart):

Seen in more detail on daily chart:

And finally, on an hourly chart:

Notice how the 2.058 Fibonacci level around 1.4640 seems to be providing a rough level of support. As I mentioned on Friday, it is possible that this level will be broken--and once that happens--become a center of gravity around which the market might oscillate for a time before making its push up towards 1.51.

Posted by Pure Guesswork at 6:28 AM | Permalink | TrackBacks (0)

Anyone have any umm...eurusd buy stops right above the downtrend line?

Posted by Pure Guesswork at 10:20 AM | Permalink | TrackBacks (0)

Grinding up against a downtrend line after a bounce from Fibonacci level.

1 hour chart:

& 15 minutes:

Posted by Pure Guesswork at 9:09 AM | Permalink | TrackBacks (0)

The decline in EURUSD during early European session today ended right above a minor Fibonacci level (2.058). Roughly around 1.4640. Shown in a succesion of charts with increasing detail:

First on a weekly, showing the base formation (1.3737 - 1.2884) and the subsequent impulsive move up:

Then a daily chart:

4 hour:

And finally a 1 hour chart:

It looks like we might get further consolidation at this point. Notice that previously in this impulsive move, Fibonacci levels, once broken have formed a focus of activity, rather than support. During consolidative periods the market oscillated around first the 1.272 level and then the 1.618 level before moving higher. It is possible that the same thing might happen with the 2.058 level (around 1.4640). Although this has twice provided support--as seen on the 1 hour chart--if it happens to be broken, it could become a focus (center of gravity) level for another sideways consolidative period before another move higher. Just some Friday morning speculation. What is less speculative is that eventually it will move higher.

Posted by Pure Guesswork at 7:18 AM | Permalink | TrackBacks (0)

Upside target above 1.51.

Weekly chart:

Daily chart showing internal Fibonacci levels.

And a 4 hour chart showing the 2.058 level as current resistance.

Notice how in late August--before the rally early this month--the market oscillated around the 1.618 level.

Posted by Pure Guesswork at 7:18 AM | Permalink | TrackBacks (0)

An update on yesterday's EURUSD post, which looked at this extended Fibonacci pattern:

And then looking at the retracement--so far--of the extended move (from beta to the 2.618 extended target);

On a 1 hour chart, the pattern of the retracement becomes clearer:

As can be seen, the high yesterday (building into the London close) was near the 48.6%--or roughly 50%-- retracement level. (And in this case "near," means within a pip.) After that there was a sell-off which ended near the 23.6% retracement level.

The other pattern to notice is how the market yesterday seemed to oscillate around the 38.2% level before that push and subsequent failure at the 48.6% level. Today that 38.2% level is currently providing resistance.

A note on the 48.6% Fibonacci level:
People often speak of a 50% retracement, but there really is no obvious way the 50% level can be related to Fibonacci ratios. However 0.486 is the square root of 0.236, which is clearly a Fibonacci ratio. Something which should be understood about the Fibonacci system is that--in describing patterns of growth and decay--it is not static, but directional. A pattern unfolds in one direction or the other and, while the 0.382 and 0.618 levels display a symmetry, other levels do not.

Posted by Pure Guesswork at 7:36 AM | Permalink | TrackBacks (0)

Some quickly updated charts on EURUSD.

First, a 4 hour chart showing a 2.618 extensive move down. The base for this move was formed after the high on June 3rd. Alpha at 1.4069 on June 4th, beta at 1.4268 on June 5th. After that came a large 3 wave pattern ending on Monday, June 15th. The 2.618 delta target would be 1.3751--which matched within 5 pips or so the actual low on the 15th.

Next, a 1 hour chart showing the action since the completion of the downward extension on Monday.

Is this all a little too neat? The high earlier this morning around 1.3990 would make a 3 wave pattern since the low where the Z wave was basically equal to the X wave (or A & C, for those doing Elliott).

Looking back at the 4 hour chart, a level around 1.3948 would be a 38.2% retracement of the extended move down. Since the rally yesterday afternoon, we seem to have been oscillating around that level. A 50% retracement would take the market just north of 1.40, a 61.8% retracement back to the original alpha level just south of 1.4070.

Posted by Pure Guesswork at 6:24 AM | Permalink | TrackBacks (0)

Short term, one pattern completed on the upside.

A 15 minute chart:

Eventually I am looking for more down movement, but there could be at least one more pattern played out to the upside before that comes about.

Posted by Pure Guesswork at 11:48 AM | Permalink | TrackBacks (0)

Looking at a six month old weekly chart of EURUSD included in this post from last December--

And then updating, using the internal fibs of the entire impulsive move (using the actual bottom at 1.2328 rather than projected delta 2.618 target of 1.2282)--

The high last week was roughly a 78.6% retracement of the entire impulsive move and also close to the high in late December, early January. (There was a higher spike high earlier in December).

Compare this to a similar pattern in GBPUSD noted in a post a few days ago. But in the case of cable, the impulsive move down was more extended (going to the 4.236 level, rather than 2.618) and the retracement only 61.8% of this impulsive move.

Looking at these long term charts I simply have to wonder whether dollar bears (especially against the euro and GBP) have become a little too complacent. I can't seem to find anyone who believes last week's highs in EURUSD or GBPUSD were tops.

Posted by Pure Guesswork at 10:51 AM | Permalink | TrackBacks (0)

Just a quick look at EURUSD on an hourly chart, showing classic 2.618 extension target met (within 2 pips), and then complete collapse back to the area of the original base top.

UPDATE (2:06 PM)

Posted by Pure Guesswork at 11:28 AM | Permalink | TrackBacks (0)

An update of the patterns from charts posted yesterday. The higher area of support noted right around 1.3800 held.

A 4 hour chart:

And similarly the third corrective wave held at a level 1.272 below the low of the first corrective wave.

A 2 hour chart:

And a 1 hour chart:

Posted by Pure Guesswork at 6:31 AM | Permalink | TrackBacks (0)

A short to medium term bull pattern with a projection for a completion around 1.42. So far the high has been around the 2.058 intermediate Fibonacci level. This morning a bounce from the 1.272 intermediate level.

Three wave mid-course corrective pattern. The third wave might be seen as having ended around the 1.272 level below the bottom of the first down wave. An alternative scenario could see a fall towards 1.3720-1.3740, which corresponds both to the 1.6.18 level and the original top of the alpha-beta base. It can also be seen on the 4 hour chart as the range of an intermediate trading zone from last Wednesday (May 20), a sort of "resting area" between the two impulsive moves from the beta low on Monday, May 18, to the high on Friday, May 22.

Posted by Pure Guesswork at 7:13 AM | Permalink | TrackBacks (0)

EURUSD has faded a few pips south of the 2.618 target. Update of these posts from yesterday and Tuesday.

Posted by Pure Guesswork at 11:20 AM | Permalink | TrackBacks (0)

The minor 2.058 Fibonacci extended level (around 1.3655) continues to weigh down this pair. Yet its repeated attempts to break through decisively seem to augur that the rally will eventually continue to the 2.618 target around 1.3840.

Once again, a 4 hour chart:

Resistance seen in more detail on a 2 hour chart:

Posted by Pure Guesswork at 6:44 AM | Permalink | TrackBacks (0)

There was a fairly strong rejection at the 2.058 Fibonacci level noted on the chart from a few hours ago. Nevertheless, the odds are this level will be broken (sooner rather than later) and the market will head for the 2.618 target around 1.3840. Then we might expect a significant pull back. Stay tuned.

Posted by Pure Guesswork at 10:22 AM | Permalink | TrackBacks (0)

Hit some well tested resistance this morning around 1.3650-1.3660 (a minor Fibonacci level). This level formed the "shoulders" of a head and shoulders pattern last week. The odds are that this resistance level will not hold this time. Target is 1.3843.

Posted by Pure Guesswork at 7:14 AM | Permalink | TrackBacks (0)

Updates on the patterns examined in a Monday morning post.

At the time those charts were made, the market had found support at a level approximating 1.2945--a level found on several different patterns. However, that level failed to provide "support" once the US stock market opened. Yet the patterns seem to maintain some validity. The region around 1.2945 since that time has become more a center of gravity than support for the market. This sort of action around a point of inflection usually indicates the market will continue trend to the next level. In this case that would mean 1.2725 to 1.2750 area.

Updated charts:

UPDATE-- As I wrote this, EURUSD has rallied up to the region of the next level on several of these patterns--an area around 1.3010-1.3020.

Posted by Pure Guesswork at 10:10 AM | Permalink | TrackBacks (0)

A few quick charts showing a convergence of Fibonacci targets around the low of this morning. (Targets converge around the 1.2945 area.)

From the eight hour charts, it can be seen that, if the level around 1.2945 does not hold, the next area of support would be around 1.2725.

On the 1 hour chart--showing the impulsive move down from an alpha-beta base--the next (4.236) target would be slightly above that.

Posted by Pure Guesswork at 6:46 AM | Permalink | TrackBacks (0)

Some short term charts showing the impulsive move last Thursday associated with ECB's decision to lower rates by only 25 BPS rather than the 50 that was expected.

The alpha-beta base was set up at the end of the Asian / beginning of the European session. When the ECB decision was announced the market jumped uip to the 2.618 delta level (although it was already moving up, straddling the 1.618 level an hour or so before.) By early afternoon in the New York session, the rally peaked at the 4.236 (phi to the 3rd power) level.

The market then sold off in a three wave correction, the C wave ending at a the 1.272 Fibonacci level below the A.

What is to follow? Sorry, crystal ball is hazy at the moment. (So much for free analysis--you get what you pay for). Let's see how things open tonight.

Posted by Pure Guesswork at 5:01 PM | Permalink | TrackBacks (0)

Classic 5 wave pattern up with a three wave correction which corrects a little more than 61.8%.

Length of C wave is 1.618 times the length of the A wave.

Posted by Pure Guesswork at 4:54 PM | Permalink | TrackBacks (0)

Exponentially multiplying European rabbits target 1.39.

Eventually.

Posted by Pure Guesswork at 6:23 PM | Permalink | TrackBacks (0)

The corrective movement in EURUSD since impulsive top last Thursday (March 19).

• A--3 waves down with a low 200 pips below the high. The third wave--(c) of A--ends 1.618 times the (a) wave. This occurs near the end of the London morning session on Friday, March 20.


• B--A 3 wave irregular countermove. (It exhibits a sort of deformed impulsive character. If the (a) of B is seen as an alpha wave and the (b) of B as a beta wave, then the base they form--a very irregular base--presents a delta 1.618 extension right around the level where the (c) of B ends.


• C--The final move is extended in time, taking a little more time than the first 2 waves added together. The (a) of C ends 1.272 times below the complete A 3 wave pattern. The (b) of C is approximately the length of the entire A wave pattern and runs out of steam about 61.8% into the initial A wave area. The (c) of C ends 1.618 times below the complete A 3 wave pattern.

Posted by Pure Guesswork at 9:14 AM | Permalink | TrackBacks (0)

Looking for patterns in the rally in EURUSD. . .

It began, it seems, with a 3 wave pattern, which could be seen as corrective.

Shown in more detail on a 2 hour chart from Friday, March 13.

• (A) Beginning with the low at 1.2454 at the Asian open on Tuesday, March 3, the first A wave was itself a 3 wave pattern which completed during the New York morning on Friday, March 6.


• (B) Another 3 wave pattern (down) ended a counter move during the New York morning the following Monday, March 9.


• (C)The next C wave up began to show more of an impulsive character than the first A wave. It began in earnest in the Asian and European sessions on Tuesday, March 10. And in fact it preceded and was a precursor of the US equity rally which began that day. The first interior wave of the C wave, or (a) of C, actually ended right before the US equity opening, and there was a sharp downward (b) of C which gave up most of the overnight gains. The following (c) of C was extended in time and also exhibted a mildly impulsive character. The (c) of C wave ending on Friday, March 13, was not followed by any significant downmove. Indeed, it could be said that during this C wave sentiment shifted, as the idea that this EURUSD rally might be more than simply a corrective move in an ongoing downturn began to be more and more entertained.

The C wave reached a level approximately 1.618 times above the A wave.
It also had an alpha-beta base, followed by a 3 step move to approximately the 2.618 extended delta target.

With the change in sentiment which had begun during its later stages, the 3 wave pattern noted above was followed by 2 impulsive patterns as the rally took on life.

The first began on Monday, March 16, when in the New York morning the 1.30 level was broken. This was the alpha wave. Over the next 24 hours the market drifted down in a gentle 3 wave pattern, reaching a low on Tuesday morning. This was the beta wave. From this base came the explosive pattern played out the next day with the Fed announcement. The pattern topped out that evening at the 4.236 delta extension level.

After a slight pullback, another smaller impulsive pattern played out, this time reaching the 6.854 (phi to the 4th power) Fibonacci extension. This pattern can best be seen on a 15 minute chart.

The 2 impulsive patterns put together creat a classic 5 wave Elliott pattern.

A 0.486 retracement (or approximately 50%) of this 5 wave pattern would take us to 1.3298. Or roughly 1.33. It is interesting to compare this level to the chart of the first larger impulsive pattern. In the strong move up on the Wednesday afternoon of the Fed annoucement the market drove right through the 2.618 delta extension target, completing itself at the 4.236 level. Often when this happens I have found that subsequent corrective moves gravitate to that level which was, in a sense, ignored on the way up. This 2.618 level would be more or less the same as a 50% correction of the entire 5 wave pattern (0.486). Thus it would not be surprising if we saw a corrective move in the EURUSD to the 1.33 level, or a little below.

Posted by Pure Guesswork at 5:34 PM | Permalink | TrackBacks (0)

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.

Posted by Pure Guesswork at 10:09 AM | Permalink | TrackBacks (0)

Interesting short term support so far turning up on a fibonacci basis, making a three wave pattern down since the high last Monday near 1.30.

Look at it two ways:

(1) After a much lower open this evening, a bounce at approximately 1.272 level below the original wave down.

(2) If that bounce holds, the two down waves will be approximately equal.

Posted by Pure Guesswork at 9:10 PM | Permalink | TrackBacks (0)

First, the short term pattern I explored last week first here and then here was obviously wrong. A dud. No go.

That brings us back to the last valid longer term pattern which posited a low at the 2.618 delta extension around 1.2520. Actual low was a less than 10 pips below that.

Subsequent action saw a three wave pattern that came up near the 1.618 level, that is, a little less than a 38.2% retracement of the impulsive move off the base pattern.

Just now the eurusd has opened sharply down.(Currently around 1.2615.)

Which leads to speculation on an extension of the previous down pattern. The next target would be the 4.236 extension in a new impulsive move down. That would bring the pair to just above 1.17.

A possibility which bears watching.

Posted by Pure Guesswork at 6:09 PM | Permalink | TrackBacks (0)

An update to the chart posted last night. (Last night's chart was drawn diriectly previous to the pop in EURUSD due to Citi rumor.) Potential target still in the 1.3080 region.

Posted by Pure Guesswork at 6:43 AM | Permalink | TrackBacks (0)

Is EURUSD trying to make another impulsive move above 1.30? It seems a bit counterintuitive now that the European banks seem to be competing with the American banks for the ugly baby of the year contest. But if the high last Thursday is charted as an alpha and the low Friday as a beta in a base pattern, then the impulsive move up during the New York Friday afternoon session ended within a pip of the 1.618 delta target. A common pattern would be for a retracement (which could be sideways rather than a distinct move down) and then a second impulsive wave up to the region of the 2.618 delta target. And that would be 1.3087.

Posted by Pure Guesswork at 8:36 PM | Permalink | TrackBacks (0)

Nice bounce on a retest of the region of 0.786 fib pullback. Short term double bottom?

30 min:

Posted by Pure Guesswork at 9:54 AM | Permalink | TrackBacks (0)

After the rally off the low on Wednesday, described by the impulsive pattern noted yesterday, a pullback stopped at the 0.786 retracement.

The "completion" on Wednesday of a medium term downtrend pattern which began in early January (charted initially on February 2 and followed with subsequent posts after that) was followed by a reasonable 200 pip plus rally.

And yet we are betwixt and between as far as projecting any sustained rally from this point. The pattern was confirmed--the bounce occurred less than 10 pips from the projected bottom. In a move of close to 1300 pips, that is fairly signifcant. And while a 2.618 target is often the completion of a move, it is certainly possible that this is merely a stop along the way.

This is what we have so far:

But if the downward pattern asserts itself once more, this is where we could be going:

The chances of this happening increase the more times passes without EURUSD rallying above 1.28.

Posted by Pure Guesswork at 8:27 AM | Permalink | TrackBacks (0)

After the completion(?) of the down pattern at 1.2520, we have had a mini-impulsive move off a base formed in late Asian, early European trading. Two strong moves up in the impulsive pattern that followed the base--the first ending at the 4.236 fibonacci target, the last exhausting itself at the rather far flung 6.854 fibonacci target.
A 15 minute chart:

Posted by Pure Guesswork at 11:07 AM | Permalink | TrackBacks (0)

A bounce off the 2.618 delta target in EURUSD.

This pattern first explored in charts on Feb 2. Then on the 4th, the 6th, and earlier this week on the 17th as the break below the 2.058 region was underway.

Posted by Pure Guesswork at 6:28 AM | Permalink | TrackBacks (0)

After a long sideways period, a break to the 1.2520 target?

See posts from February 6 and February 4, etc.

Posted by Pure Guesswork at 8:36 AM | Permalink | TrackBacks (0)

Posted by Pure Guesswork at 3:59 PM | Permalink | TrackBacks (0)

Updated pattern first shown in Monday, Feb 2 post:

Resistance came in around the 1.618 level, now we could see support focused at the 2.058 level right below 1.28.

Posted by Pure Guesswork at 8:17 AM | Permalink | TrackBacks (0)

Two downward impulsive patterns on EURUSD, one on an 8 hour chart and one on an hourly chart. They converge, with the 2.618 delta target of the larger pattern being in the general area of the 4.236 delta target of the smaller pattern.

8 hour:

1 hour:

Posted by Pure Guesswork at 7:46 AM | Permalink | TrackBacks (0)

Resting around the 2.058 (1.3644) level. Still on track for the 2.618 delta target of 1.3944.

Posted by Pure Guesswork at 7:23 AM | Permalink | TrackBacks (0)

Going back to the question in the last chart of Tuesday's euro post, the answer is yes.

After the low in EURUSD in late October, the market formed a triangle formation through November. But that essentially ended with the lows around November 21. The subsequent move up to 1.3080 broke through the downtrend line and can now be seen as the alpha top of a newly forming base. The low at 1.2546 on December 4 (last Thursday) was the beta low. The impulsive move yesterday topped out at the 1.618 delta target. The next target--delta 2.618--would be at 1.3944.

Posted by Pure Guesswork at 7:22 AM | Permalink | TrackBacks (0)

Catching up on the big picture in euro patterns.

A weekly chart that shows an alpha-beta base formed in September between 1.3878 and 1.4865.

Looking at this pattern on a daily chart--the 1.618 delta target was 1.3269. There was a low at 1.3257 on October 10 and a subsequent pullback. The 2.618 target was 1.2282. The lows made on October 27 and October 28 were within the "zone" of this target. The subsequent pullback took the market above the 1.618 downward target--in effect, a 32.8% retracement of the impulsive move down.

And in fact, when the target low is replaced by the actual low, the sharp 3 day retracement which culminated on October 30 was within 1 pip of a 38.2% retracement of the entire impuilsive move down from 1.4865.

The 1.272 target below the October low would take the market down to the November 2005 lows around 1.1640.
Projecting internal fibonacci levels down to that target shows the low in October as the 78.6% level of the move.

Since the October low we have been trading sideways in what appears to be a triangle pattern. But since late November, it is possible that the market has moved past that pattern and is setting up something new.

Posted by Pure Guesswork at 7:37 AM | Permalink | TrackBacks (0)

Short term up pattern.
30 minute charts.

Posted by Pure Guesswork at 10:00 AM | Permalink | TrackBacks (0)

Still no breakout.

Pressure and compression against HAS candles and 13 day EMA, but once again an inability of this market to break through resistance on the upside.

Posted by Pure Guesswork at 7:18 AM | Permalink | TrackBacks (0)

On daily chart--still compressing beneath the resistance formed by HAS candle and corresponding 13 day EMA.

And on a tighter time scale the market is compressing within the range of the low on October 27 and the initial rally top two days later. The mid-level of this range is 1.2812--prices have been sprialling around this level throughout these first two weeks of November, first hitting the outer fibonacci bands within this range, then the inner bands. This morning the 38.2% level was hit (again). We have a slight bounce off this level at the present time..

Posted by Pure Guesswork at 7:10 AM | Permalink | TrackBacks (0)

Daily with HAS candles, 64 EMA and multi-period stochastics.

Two potential impulsive patterns. Notice how they relate to each other. A delta 1.618 target resistance at 1.2930 on the first, a minor resistance (1.272) at 1.2925 on the second. (And that resistance zone has initially shown some validity.
And both project a delta 2.618 in the neighborhood of 1.3060.

Posted by Pure Guesswork at 6:49 AM | Permalink | TrackBacks (0)

First, an updated daily chart showing the impulsive move that ended near the 2.618 delta target on October 28:

Then a 4 hour chart showing the initial correction of this move, taking the market back to the 1.618 delta level on October 30--corresponding to a 38.2% correction of the entire impulsive move.

This move up was quickly retraced. Since then we have been in a 3 wave irregular downward correction of the initial upward correction. First a swift move down to about 50%, then a zig zag downward pattern that made up the irregular Y (or B) wave, with the irregular middle leg of this pattern reaching the 61.8% level. Finally this morning we seemed to have bottomed out around the 78.6% level.

On an hourly chart you can see the pattern more clearly. Note that a momentum study like RSI would show a regular rather than irregular 3 wave pattern, with a low at the point of X, then a high at Y and a lower low at Z.

Right now, on a short term basis, the market is a little extended and overbought. But it is quite likely we will see more upside after either a pullback or a pause at the current level. It should be noted that European stocks and US stock futures are rallying, the S&P continuing the upward flag pattern it has been forming since the impulsive move up in stocks on October 28. Stocks could break out of that pattern to the upside today. The euro would very likely follow.

Posted by Pure Guesswork at 7:22 AM | Permalink | TrackBacks (0)

Posted by Pure Guesswork at 6:36 AM | Permalink | TrackBacks (0)

Traded up to the 2.058 intermediate level. Resistance found here.
Seen more clearly in this 4 hour chart:

Posted by Pure Guesswork at 7:08 AM | Permalink | TrackBacks (0)

An update on the pattern shown in this post from October 13th:

EURUSD has fallen this morning within 50 pips of the 2.618 delta target projected in the charts in that post. WIth a move of over 2500 pips, that puts the low today close enough to consider the target met. Time to look for signs of a bottoming process,

Posted by Pure Guesswork at 5:52 AM | Permalink | TrackBacks (0)

First leg of an impulsive move down from an alpha beta base. 1.618 delta target met last Friday. Modest rally off this low continues today.

First resistance is around 1.3610, the 1.272 level. Today this has been a sort of central point around which the market has traded, with a slight upward bias.

Next resistance will be the original alpha level around 1.3875, and if it gets through that level, 1.4090.

But if the pattern in the chart above is correct, we might see a resumption of the downtrend in euro against the dollar. The target would then be the the 2.618 delta. How far down with this pattern? Pretty far. How does 1.2280 sound?

Posted by Pure Guesswork at 9:59 AM | Permalink | TrackBacks (0)

Updating this post from Monday night / Tuesday morning, the support of last Friday at the 48.6% level truly became resistance. One time only was the market able to push a few pips beyond this level, but without conviction.
An 8 hour chart:

An attempt was made on Tuesday afternoon in US trading session, Though it spike up to 1.4225, the highest hourly close was 1.4194.
A 4 hour chart:

Next stop 1.3825.

Posted by Pure Guesswork at 6:20 AM | Permalink | TrackBacks (0)

Possible impulsive pattern on shorter term basis.

Posted by Pure Guesswork at 8:29 AM | Permalink | TrackBacks (0)

Bottom line, the level I projected as support last night (1.4195) did not hold. The market might trade above this level again in the coming days, but it was broken so convincingly (and so quickly) today that it now looks quite possible the euro will trade down to the next fibonacci level (38.2% of the long term impulsive move, or a 61.8% correction).

On an 8 hour chart it is possible to see how that 1.4197 level provided an area for a bounce on Friday and Sunday night.

But also how it was soundly broken during US trading hours today.

UPDATE--Tuesday Morning, September 9, 2008
The market traded up to the 1.4197 fibonacci level overnight (1.4200 high) but failed to get over it. Current level (7:30 AM EDT) is 1.4152.

Posted by Pure Guesswork at 9:02 PM | Permalink | TrackBacks (0)

Following up on this entry from August 18, 2008, a look at the entire impulsive move from October 2006 to the double top in April and July of this year. The market has now corrected more than 50%, of the entire move, specifically to the 48.6% level. (I know this level is a little arcane, but trust me, it has a mathematical basis when viewed in an expansive move like this.)

One can see that the euro initially gained some support at the 61.8% level, and in the post cited from August I thought that would provide a bottom. I was wrong. But this lower level could very well hold. In theory the level was 141.97, almost exactly the low on Friday (1.4195).

It is likely we will see a real rally from here, though just what form it will take is uncertain. The actions of this weekend vis a vis the GSEs so far this evening (8:30 PM NY time) is moving markets counter to risk aversion. S&P stock futures are up 30 points, treasury bond futures are down over a full point, the Nikkei is up over 250 points. This reaction might prove to be over optimistic. But it should help the euro. The yen, meanwhile is sinking, another sign that risk aversion is momentarily off the table. The eurjpy pair could be even more of a winner than eurusd.

Posted by Pure Guesswork at 8:49 PM | Permalink | TrackBacks (0)

Update on pattern found in yesterday's post. The delta 1.618 target was a point of attraction after the impulsive rally. It traded higher but the level around 1.4890 seemed to be the shoulders level for a head and shoulders formation. Today's decline has been arrested near the top of the alpha-beta base at 1.4805. Although it traded below that level, it quickly snapped back above it. Seems to imply the uptrend is still in play. Further support at 1.4776 and 1.4753. Gets below 1.4740 and we are playing a different game.

Posted by Pure Guesswork at 8:55 AM | Permalink | TrackBacks (0)

As indicated in this post from Monday, support for EURUSD was predicted around 1.4660-1.4670. The post on Tuesday, projecting a new base pattern for a move up was wrong. Or early. It now appears that the base pattern was still forming (with more back and forth action). A high at 1.4805 at the Wedensday Tokyo open could be seen as an alpha, with the 1.4670 low at the London close as beta.

If this pattern is correct then...

First delta target (1.618 of base) would be 1.4888. Hit this morning.

Second delta target (2.618) would be 1.5023.

And the third possible target (4.236) would be 1.5241.

Or the pattern could be wrong, like Tuesday's.
TWT.

Posted by Pure Guesswork at 11:03 AM | Permalink | TrackBacks (0)

15 minute chart:

Posted by Pure Guesswork at 2:26 PM | Permalink | TrackBacks (0)

Euro finding support at former fibonacci target?

And on a weekly chart, showing actual high at 1.6038.

Posted by Pure Guesswork at 8:11 AM | Permalink | TrackBacks (0)

Extended delta wave may have completed itself at the 6.854 level:

Posted by Pure Guesswork at 7:47 AM | Permalink | TrackBacks (0)

Two models:

THe first, with the December 2004 top as an alpha and the November 2005 low as beta, posits a top around 1.6950..

The pattern on tha monthly chart:

The pattern on a weekly chart:

The second only looks for patterns after the 1.1640 low in November 2005. The high around 1.2980 in June of 2006 is seen as the alpha of the new base. The low the next month at 1.2458 would be the beta. The pattern would develop as follows:

On the monthly chart:

And on the weekly chart:

The first scenario is more in keeping with current bearish sentiment in financial markets. It is, relatively speaking, an easy call. It assumes there will be more problems with banks, a full GSE bailout becomes necessary, etc..

The second runs counter to current sentiment. It posits that the euro high is in, that there will be some sort of rally in US financials, and by the time that rally has run its course perceptions of the relative strengths of the U.S. and european economies will have changed to the extent that the euro will no longer seem a safe haven.

Posted by Pure Guesswork at 9:27 AM | Permalink | TrackBacks (0)

Shocks to the Euro fail to provide any heavy downside action.

This morning the ZEW report came in signficantly weaker than expected, falling to -52.4 from -41.4 in May. The consensus expectation was for a slight fall to -42.0. And then there was the Irish no vote on Lisbon EC treaty. The Euro suffered a bout of sell on the rumour last weej, buy on the fact this week. Since then it has been strenghtening. An article in the NYT deals with the view that there is increasing sentiment that European monetary union does not depend on the greater political union the treaty provides. It seems the majority of Europeans might favor this state of affairs. But is it workable in the long term.

From the NY Times:
"...these deepening differences within Europe could still pose a long-term threat to the euro, said Paul De Grauwe, a Belgian specialist on the currency.
“In the very long run, a monetary union must be embedded in a political union,” said Mr. De Grauwe, a professor of economics at the Catholic University of Leuven. “Sometimes there are shocks that are so strong that without a close political union, it can lead to a breakup.”

And Gideon Rachman in the FT explains how the treaty might mean less democracy not more democracy in the EC.

Also from the FT: Some Fed officials sending warning that markets are "getting carried away" with their expectation of rate hikes any time soon. "They do not dispute that the next move in US interest rates is very likely to be up. But they feel the market may be pricing in too much tightening too soon."

Posted by Pure Guesswork at 9:40 AM | Permalink | TrackBacks (0)

Posted by Pure Guesswork at 9:41 AM | Permalink | TrackBacks (0)

While there is increasing commentary about a top in the eurusd rate, here we consider what is becoming a minority view, that the euro rally has more to go. As John Percival has pointed out, these market views of incipient change in a trend often jump the gun. The euro rally obviously will end at some point, but there seems to be too much complacency about the view that we have reached that point.

A monthly chart, showing the December 2004 top as alpha and the November 2005 low as beta. The high last November at 1.4966 can roughly correspond to the 1.618 delta project.

The "target" here would theoretically be around 1.6950, but it could go above 1.70. (If we take 1.4966 as delta 1.618, the 2.618 projection comes in around 1.7020.)

Looking at this second chart (but the first, with a target of 1.6950 would work the same way) we see the following.

1. From the beta low there is a move up (somewhat impulsively) to the 0.618 level of the alpha-beta base. (Shown in a weekly chart from the end of September 2006.)

2. Then a leveling off and slow steady grind up to the original alpha level in a 3 wave pattern. Notice that the slope of the rally is the same as that which brought the market up to the 0.618 level around 1.29. (Weekly chart from late May 2007.)

3. A period of volatility as the sub-prime credit crisis story begins in the summer of 2007. A sell-off, a new high, and then an even sharper sell-off.

4. Then a very sharp rise in the euro through the Fall of 2007. In this next chart--from the end of November 2007--the rise is much more severely inclined than the previous rally up to the alpha level. It occurs in a 3 wave movement, with a very small and brief retracement once the 1.272 level had been achieved. (In this chart the delta 1.618 level has been moved up to the actual high in November at 1.4966.)

5. Which brings us to the present: another impulsive move after a 3 month period of consolidation, beginning in late February, hitting the 2.058 level by the third week of March, then a struggle to move higher--a struggle marked by an initial sell off, then an irregular back and forth move to a new high, breaking 1.60 on April 22.

Which raises the question whether that 1.6018 high can be seen as part of an irregular correction which began with the 1.5904 high on March 17 (which also corresponds to the culmination of the credit market panic with the fall of Bear Sterns). And indeed when we project the move from 1.5904 to 1.5340 on March 24 as an X wave in a correction (or A if you prefer Elliott), and the new high on April 22 as a Y or B wave, then projecting the length of the X wave from the top of the Y wave, we get a (1.618 times X) target for the Z or C wave at 1.5292. 10 pips above the actual low at 1.5282.

Posted by Pure Guesswork at 10:09 AM | Permalink | TrackBacks (0)

Follow up from yesterday's post.

Posted by Pure Guesswork at 9:14 AM | Permalink | TrackBacks (0)

ZEW expectations survey came out below expectations, falling to -41.4 from -40.7. Bloomberg consensus was for a rise to -37. Euro had been rallying before the release, steadily making up yesterday's decline. Tthere was some immediate profit taking when the number first came out, but within 10 minutes this sell-off reversed and yesterday's high was surpassed.
The market was primed to rally because of its euro short condition and some quick study found euro friendly details within the ZEW. First, the survey of the current business situation rose, while the consensus expectations were for a small decline. And in fact, currently the German economy is growing quite nicely. Second, the increase in pessimism about the future which led to the fall in the headline number was predicated on an increasingly prevalent view that the ECB will not be lowering rates anytime soon, and in fact, might very likely raise rates.

Posted by Pure Guesswork at 7:10 AM | Permalink | TrackBacks (0)

Holding on at the 38.2% retracement level of December 2007--April 2008 rally.

Counter move and retracement.

Posted by Pure Guesswork at 10:22 AM | Permalink | TrackBacks (0)

(for now...)

The break of 38.2% is a critical rally buster. So far it hasn't happened.

Posted by Pure Guesswork at 9:52 AM | Permalink | TrackBacks (0)

High on April 22nd was 1.6018.
Looking at that level as delta 2.618 and figuring retracement levels down of entire move from 1.4308 beta (December 20, 2007):

Posted by Pure Guesswork at 6:36 AM | Permalink | TrackBacks (0)

Two engines for short covering rally in dollar this morning.
One, there were two separate business surveys from the eurozone--the IFO from Germany and the INSEE from France--which both fell more than expected. And immediately commentators began to air the view that this is concrete evidence of damage from an elevated euro exchange rate. Damage they have been looking for, but which has seen illusive. Calls for a less hawkish ECB, etc..
The second engine is the emerging view that the Fed will pause after a 25 bp easing next week. Featured in WSJ article by Greg Ig and in chatter by bank analysts. A topping pattern in bond charts?
So you see a new scenario being ventured: Fed is done easing, ECB will not raise rates anymore and might actually begin to ease. The problem with the second part of this scenario is that it might fall within the category of wishful thinking. This is not the first time this opinion has been tossed out there, and so far every time Trichet or some other ECB official has calmly shot it down.
So--at this point--it is best to see this as primarily dollar shorts showing a little caution. There is some damage to the euro rally, but not enough to signal a change in trend. Yet.

Posted by Pure Guesswork at 6:30 AM | Permalink | TrackBacks (0)

Daily

A view of the region between the 1.619 and 2.618 levels on an 8 hour chart:

And fibonacci levels seen on a smaller subsection on an hourly chart.

Posted by Pure Guesswork at 10:18 AM | Permalink | TrackBacks (0)

Still on course for a high above 1.60. But maybe this is time to start getting out of longs.

Posted by Pure Guesswork at 10:39 AM | Permalink | TrackBacks (0)

Despite the knee jerk reaction to G7 statement, the euro is still holding to internal fib patterns that would lead to a run above 1.60. The fall this afternoon has run out of steam around the 0.486 level.

Posted by Pure Guesswork at 6:05 PM | Permalink | TrackBacks (0)

Still backing and filling along fibonacci levels for a run above 1.60. So far this week it has been stuck in the middle of the range (0.382--0.618) between 1.618 and 2.618 delta targets.

UPDATE--9:30 AM
The 2 moves down since the initial top on the March 16 Sunday night Bear Sterns panic have each shown an impulsive quality, with alpha-beta bases and delta impulsive moves.

The first was described in a March 25 post , the relevant part of which was--

So far slightly more than 50% of the impulsive delta wave move has been retraced.

The second move, from March 31 to April 3 low had a very small base and an extended impulsive move, ending around the 6.854 target.

Posted by Pure Guesswork at 8:06 AM | Permalink | TrackBacks (0)

Still a better bet on the long side. Seems to be working towards a break of 1.60.

Seems to be working internal fibonacci levels between 1.618 and 2.618 delta targets.

Posted by Pure Guesswork at 8:07 PM | Permalink | TrackBacks (0)

Looking at the remarkable rise since the low registered in November of 2005 (1.1640). The breakout in the following spring to 1.2980 (late May of 2006) as alpha, the low in late July around 1.2460 as beta. (There were actually three retracements to this approximate level after the May high: first in June to 1.2475, then the July low, and finally an October re-test at 1.2480.)

Since that base the market moved up to the 1.618 region in December of 2006, then the 2.618 region in June-July 2007. After that there have been two extrememly impulsive moves: the first which gravitated around the 4.236 level (all through the Fall of 2007 and early winter of 2008), and then the present move (the greatest part of which occurred last month (March 2008). It is approaching a 6.854 level above 1.60 (1.6035).

In a manner similar to the overlaying patterns noted in the eurgbp marketl, there is a shorter term pattern with a delta target in the same region as that shown in the weekly chart above. And like the eurgbp overlay, the alpha is the high first made above the 4.236 delta level on the weekly chart (the high made late last November at 1.4966. With this as alpha and the subsequent low in late December at 1.4308 as beta, the following pattern develops:--

The difference between the eurgbp chart and the euro chart is that the eurgbp has already met its target, while the euro is still working towards its target. If these patterns are valid, it would require a GBP rally at least as strong as an upcoming euro rally.

At the present moment the euro is trading around 1.5550--is it a buy here?

Posted by Pure Guesswork at 6:49 AM | Permalink | TrackBacks (0)

The decline in eurusd seems to have corresponded closely with the delta pattern shown in earlier posts. The bottom came Monday morning, March 24 near the end of Asian session. The low at 1.5340 was 6 pips from the projected target at 1.5334.

So far slightly more than 50% of the impulsive delta wave move has been retraced.

See early charts of this move here and here.

Posted by Pure Guesswork at 7:16 AM | Permalink | TrackBacks (0)

FT: “Dollar rallies as traders square bets.” Also: “Both gold and oil prices fell heavily amid talk that two large funds were cashing in profitable bets.”

Financial News Online: “Lehman Brothers Veteran launches hedge fund” to focus on “distressed structured products.” Also plans to launch a long term private equity fund to invest in less liquid securities. Fund to have minimum investment period of five years.

Bloomberg: Richard Bove (described significantly in article as “the analyst who advised selling financial shares eight months ago before they tumbled...”) now saying that the present provides a “once in a lifetime opportunity” to buy these sames shares.

Financial News Online: On the other hand Kenneth Murray, of Blue Planet Investment Management (described here as having shown “an uncanny knack for predicting how the banking crisis will unfold) says things are going to get much worse. Despite “expectation-beating” first quarter results from Goldman Sachs, Lehman Brothers and Morgan Stanley, he is expecting an escalation of the crisis. But at the end of the article, curiously enough, he also speaks of a “once in a lifetime opportunity,” but that opportunity has, in his opinion, not yet arrived. (But he likes Greek, Polish and Russian financial stocks.)

And in the Telegraph a (suitably indignant) story of the investigation of the HBOS rumor story, complete with hedge fund “dirty tricks” units, etc..

Markets are closed or thinly traded for Good Friday.

Euro trades sideways after yesterday morning's tumble

Posted by Pure Guesswork at 8:52 AM | Permalink | TrackBacks (0)

Showed some support at 1.272, then whipped through 1.618 only to show support at 2.058 (equivalent to 1.272).
Possible scenario: a slowly building rally that runs out of steam around 1.55 (1.618).

Posted by Pure Guesswork at 8:42 AM | Permalink | TrackBacks (0)

After the limited sell-off yesterday on Fed action. A renewed attempt to get through 1.55.

Hourly chart.

Posted by Pure Guesswork at 10:09 AM | Permalink | TrackBacks (0)

A 4 hour eurusd chart showing the impulsive pattern identified yesterday.

It shows a similar pattern to the move from January through November 2007 seen on a weekly chart.

What is similar in both charts is the steepness of the ascent, after a long sideways move once the 1.618 level has been achieved.
In the lesser timeframe the move is roughly sideways, with one final dip approaching the original alpha high before the sharply impulsive move begins. In the weekly chart that pause is more chaotic, with a move down below the alpha high, than an ascent to the level of approximately 2x the base, then down again to the alpha level before the sharp ascent begins.

On the weekly chart the duration of moves is as follows:
8 weeks from alpha to beta.
13 weeks of a slow steady climb to the 1.618 level.
16 weeks pause--(a very chaotic pause, fluxuationg wildly between the 2.0 level and below alpha).
14 weeks steeply sloped climb from the original alpha to the 4.236 level.
This last move is accomplished by a six week climb to delta 2.618, 2 week pause around (not below) that level, and then another 6 weeks to 4.236.

Looking at the weekly chart, with its delta 4.236 target met, raises the question what pattern is in play in this latest break-out well above the November high?

Is everything which has happened since the November high until the breakout a few days ago been a sideways correction (x-y-z)? Or was the high on February 1 a new alpha and the low on February 7 a new beta?

In which case we could project:

Or is perhaps the (short term) top made yesterday a new alpha and we have yet to see the beta?

Posted by Pure Guesswork at 10:12 AM | Permalink | TrackBacks (0)

Another day, another pattern. This is a minor pattern, but the 1.5220 level could provide some resistance. Especially with the extended move of the last few days. It is as good a level as any for this move to--at least temporarily--run out of energy.

Posted by Pure Guesswork at 5:37 PM | Permalink | TrackBacks (0)

Rally in euro since the low of February 7 may be running out of steam. Sentiment has come to doubt the resurgent dollar story that became popular earlier in the year.

A pattern (first from yesterday:

Then updated this morning:

Look for topping pattern at the 1.4894 level.

UPDATE-FEBRUARY 27, 2008, 9:30 AM EST

There was--quite obviously--no topping pattern at 1.4894. Market blew through that level without any real resistance being shown.

It seems that John Percival's remark that the dollar is the new carry funder is proving true. Risk acceptance back, stocks up, commodities up and the dollar sold by all. Six months to a year ago it would have been "the yen sold by all."

Posted by Pure Guesswork at 9:53 AM | Permalink | TrackBacks (0)

First, weekly:

And then a closer look on daily:

Posted by Pure Guesswork at 10:33 AM | Permalink | TrackBacks (0)

Posted by Pure Guesswork at 1:49 PM | Permalink | TrackBacks (0)

And then a pause. Action is on disappointing US employment figures for December. Unemployment rate came in at 5%. November was 4.7%, and a rise to 4.8% was expected. This was ultimately more surprising than the poor payroll number, which printed at +18k, less than the consensus expectations (50k, but ranged from 30k to 70k). Last month was revised up 21k to 115k 3 month average is still 97k. Of course all these numbers will probably be revised.

For now, that 78.6% level is holding.

Posted by Pure Guesswork at 9:41 AM | Permalink | TrackBacks (0)

The euro rally from the low of .8227 in October of 2000 to 1.3660 at the end of December 2004 could be charted out with two alpha-beta-delta pairs, with an irregular x-y-z in the middle.
The first alpha occurred in January 01 at a level of .9339. The beta was made in July, almost exactly six months later, at .8349. The delta 2 target was around 1.0950--1.10, which it achieved in February of 03.

There then came an irregular x-y-z, then a new alpha at 1.2926 in February of 04, a beta at the end of April at 1.1759, and a move up to the delta 1 target (1.618) on the last trading day of 2004.

Posted by Pure Guesswork at 11:12 PM | Permalink | TrackBacks (0)