EUR/USD: Keep Eye On 1.31221/04 Target
eFXnews | Aug 27, 2014 03:37AM ET
There ain't no rest for the wicked and there ain't no rest for the euro...A short term 261.8% Fibo projection ref is currently tested but little says that the move will stop there (apart from a decent stretch to its 'SREV' - a SEB measure based on key drivers for the pair). The stretch as defined by the deviation from the 21 day exponential moving average comes in at 1.3120, equaling a 423.6% Fibo projection and a Sep'13 reaction low at 1.3104, so those make up the next objective are look for. First resistance is located at 1.3179.
Nearness to the 1.12-handle and the short-term stretch has lured sellers back to the market. To neutralize this stretch the 8/21day equilibrium measures, now at 1.1075/55 should be revisited. This area also coincides with a short-term pivot and thus works well as a primary downside target. More targets exist, but let's get back those on a bearish looking session close below mentioned support.
Correctional forces is in play for a three-wave sequence lower, possibly to test 1.0860 if/when 1.0915 is violated. This comes after a competed short-term bullish five-wave impulse, meaning that once the correction lower ebbs, another bullish five-wave sequence should be sought - then for a test/break of a medium-term key ref at 1.1053.
Yesterday's downside spike (and this morning's ascent) further enhanced the outlined view of an imminent upside reaction. Underpinned by the bullish divergence there should be more buying in the pipeline and we hence repeat that the oversold status and bullish divergence possible is the starting point for a reaction that primarily will be aiming at the 0.8536-area.
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