Replies to post #53485 on Options Wonderland

[dalcindo]

Re: EUR:USD retracement

Hi, 3X!

Very exciting market today, indeed.

Currently, the pair is retracing along two significant Fibonacci overlays:

One shorter-term interval Fibonacci representing a price range from 12 JAN 2010 HIGH = 1.45791 to 11 FEB 2010 LOW = 1.35318 with the following retracement levels:

1 - 23.6% = 1.37788 (approximated earlier today @ 11:15 central time)

2 - 38.2% = 1.39318

3 - 50% = 1.40531

4 - 61.8% = 1.41790

5 - 100% = HIGH


The other longer-term interval Fibonacci representing a price range from 24 NOV 2009 HIGH = 1.5144 to 02 MAR 2009 LOW = 1.24562 with the following retracement levels:

1 - 23.6% = 1.34789 (unattained as of yet)

2 - 38.2% = 1.37993 (reached 09 FEB 2010 @ 10:00)

3 - 50% = 1.41162

4 - 61.8% = 1.45093

5 - 100% = HIGH

Because EUR and USD index charts are printed only at EOD, I try to obtain some "directional aroma" from the ETF of USD's PowerShare Index Bullish/Bearish Fund charts, especially the relative strength chart, considering that the original USD index is weighed against the average of 6 other major currencies. So, the intra-day moves should be as close as it can get to its market sentiment:


I believe that a move over the 38.2 = 1.37993 (already reached 09 FEB 2010 @ 10:00) would represent some insistence from investors to bring the EUR:USD pair to the next Fib level of 50% = 1.41162.

If that rally failed, look for further down-trend below recent LOW = 1.35318.

For now, the trend favors a testing of the shorter Fib interval with 23.6% = 1.37788 as target value. Although approximated earlier today @ 11:15 central time, it still remains to be physically touched for any substantial signal of reversal or continuation to appear, IMHO.


OUTLOOK:
However, the long-term perspective keeps the EUR:USD pair bearish, granting the USD more possibilities towards the downside. If the market allows he pair to unwind a bit with the intention to throw it to lower lows, then look for shallow retracement to the 38.2% level in the short-interval Fib values above.

Incidently, the DAILY UUP chart (not posted here), may provide some early indication whether that relaxation is just that, or whether it is the beginning of a bearish trend for the USD. For this indication, look for the daily 200-EMA line, which is about to be tested today or very soon this week.


$USD ETF (UUP vs. UDN: RS) - PS Index Bullish/Bearish Fund - 12-Mo., Daily Chart:


- Dalcindo