March Euro Poised To Change Trend To Down
The Pattern, Price & Time Report | Dec 28, 2012 01:22AM ET
Concerns over the U.S. fiscal cliff becoming reality are helping to drive the March euro lower overnight. Currently, the market is finding support on an uptrending Gann angle slightly above a main bottom. A failure to hold this angle will be another sign of weakness while a break through the swing bottom will turn the main trend to down.
Although the March euro traded through a short-term resistance zone at 1.3246 to 1.3263 on Thursday, the market wasn’t able to hold on to these gains. This zone was tested again overnight with the sell-off signaling a complete failure of the 50% to 61.8% levels.
Besides the retracement levels, downtrending Gann angles should be watched for resistance. The angle which stopped the market on Thursday dropped down to 1.3291 today. Overnight, another angle at 1.3261 provided resistance. During the session the market penetrated the main Gann angle at 1.3201 but the market quickly recovered.
The major angle to watch today is at 1.3172. This angle has provided direction and support since the March Euro bottomed on December 7 at 1.2892.
Swing chart analysis shows that the main trend is still up, but the trading action suggests that the market is poised to change the trend to down on a break through the swing bottom at 1.3170. Based on the near-term range of 1.2892 to 1.3321, expectations are for the market to test a retracement zone at 1.3107 to 1.3056 once the trend turns down.
The possibility of the fiscal cliff talks breaking down over the next few days has traders on edge. This is creating a potentially volatile situation. Based on the daily chart, the market is likely to accelerate to the upside through 1.3321 or to the downside through 1.3170.
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