Monthly trend is bullish and as we’ve said in previous research recent price action is not match to market that turns in reversal. It’s more common for continuation market. Price has hit monthly overbought, 0.88 Fib resistance, and after all it just has reached nearest Fib support at 1.4140. Second, although it seems was broken, market still has not reached Confluence support and now it looks more like W&R of previous lows. This is not very typical for situations when market really intends to move lower. It looks like the downward power is not so great, at least currently. Also take a look at price action during the recent couple of months – two hammers. Sellers try to press down, but buyers return all right back, hence EUR purchases even from nearest retracement levels are significant. So, overall small signs, if we will take them together, tell that up move continuation is very probable. Furthermore, recent price action looks like bullish pennant pattern, so I suggest that it looks like bullish wedge on weekly time frame, we’ll see…
Nearest target stands at 1.5081 – just above the previous highs – this is 0.618 extension from most recent AB-CD pattern. Next area to watch is 1.5272, but potentially it could turn to butterfly “Sell” pattern. The target of this pattern is 1.27 extension at 1.6027. Also it almost coincides with 1.27 target of bullish AB-CD at 1.5925 and with 1.0 Fib extension of most recent smaller AB-CD. By the way, from classical standpoint upward move should be equal to the mast of the pennant – that is 1.5866 area.
Still, from another point of view, if you draw trend line and link lows at 1.1874 and 1.2870, then you will be able to see that this trend line nicely holds upward move. From that perspective retracement in July to 1.37 Confluence support will be normal, since it precisely will reach this trend line.
The crucial area for bullish perspectives is 1.3650 – down break of pennant and Confluence support will tell us that probably we can’t count on upward move in nearest time.
Although we’ve spoken also about 3-Drive “Sell” pattern in previous researches, here I do not mention it, since I hope that you remember it. Besides, it has almost the same potential reversal point as AB-CD pattern – 1.5250 area.
Weekly trend holds bearish. First, I just want to remind you our suspicions, that we’ve discussed in previous research. If we will take a look at overall picture then we’ll see that the nature of up move and current move is different. Current action is not thrust. It looks like retracement, and probably upward move could continue. Who knows, may be current pullback is just a respect of strong support, but market has not quite reach it (monthly Confluence support). That’s why it’s hardly so. I don’t know but currently personally for me this environment looks more bullish rather than bearish. Here are some reasons for that. First, we clear see bullish dynamic pressure here. Look, market holds bear trend, but price action does not support that, market does not ac
celerate lower. Second, from classical perspectives, we see that bullish wedge is forming. Third, inside the wedge Butterfly “Buy” pattern has been formed (we discussed it previously) and now market acts as it has to – shows nice upward week after pattern has been completed. Also we can treat this recent price action as Gartley “222” “Buy”.
Speaking about the targets – nearest one is 1.27 of Butterfly at 1. 4934, slightly about the highs. But this is the same as 1.5081 – 0.618 Fib extension from AB-CD pattern, because 1.50 is significant level, and there are a lot of stops, just above the high at 1.4925. Since target of butterfly is higher – stops will be triggered and market will easily fly to 1.50-1.51 on execution of these stops.
Second area of targets is 1.5250-1.5270. It includes 1.618 Butterfly extension target and monthly AB-CD target. Still, currently fundamental events and data come on first stage and could change overall picture drastically, but currently it looks like as we’ve just said. http://www.platforma.zulutrade.com – 1000′s Signal’s Providers to choose from http://www.dukascopy.com/swiss/english/forex/jforex/?ibref=2410 – Fill the difference , try DukasCopy ECN Forex Platform provides direct access trading, excellent-instant execution!