Price action on EUR/USD (a daily chart of which is shown) as of Friday (11/12/2010) has made a bearish correction down to a key 38.2% Fibonacci retracement of the last major bullish run (from the late August low to the early November high). This correction occurs after price hit a 9-month high at 1.4280 just last week.

EUR/USD is still heavily entrenched within an unmistakable overall uptrend originating from the June lows. The corrections that have occurred thus far within this uptrend have been within normal, expected bounds and percentages. The current bearish correction, at this point in time, is no exception.

Having just reached the 38.2% Fib retracement around 1.3600, price action could still drop down to the 50% retracement around 1.3400 and the 61.8% retracement around 1.3200 without significantly breaking the current overall uptrend.

In the event of a bounce off the current 38.2% retracement, the clear upside resistance target would be a re-test of the noted 1.4280 long-term high.

To the downside, the next key support level resides around the noted 50% Fib retracement around the 1.3400 price region.

In terms of Elliott Wave structure, if the current 38.2% retracement level is able to hold, price could currently be considered to be near the tail end of Wave 4 within a 5-wave dominant uptrend.

Recent Articles By James Chen:

• EUR/USD – Continues Upside Correction After Non-Farm Payrolls
• EUR/USD – Continued Steep Bearish Bias
• USD/CHF Trading In A Potential Uptrend Channel
• Can USD/JPY Break Above Key 83.00 Resistance?
• USD/JPY Breaks Above Key Resistance Line
• All Articles By James Chen »

Leave A Comment :