Technician Edge: Euro Breaks Support and Downside Targets

Mar 24, 2010: 4:00 PM CST

I wanted to share my post today at the Technician’s Edge Column at the GreenFaucet.com website, which addresses the key support level broken today in the Euro Index.

Today’s post is entitled “Euro Breaks Support:  Downside Targets” which addresses why the broken support level is important, and what potential targets to play for which might serve as support should price continue lower.

First, here is the Weekly Chart:

I highlight that today’s action took price under both the 61.8% Fibonacci Retracement along with the ‘prior price’ support (seen best on the daily chart) at the $134.50 level.

The break was clean, and occurred with a gap this morning which is common once a key level is officially broken.

I highlight the two potential targets – the dual “prior price” support level and “Elliott Wave” projection that align at the $128/$129 index level.

Beneath that, we have a full retracement back to the $125 level from the late 2008/early 2009 low.

Next, the Daily Chart:

The daily chart shows a likely Elliott Wave fractal count, placing us in a 5th wave down.  Under classic Elliott Wave assumptions, Wave 5 tends toward equality of Wave 1, and if that plays out here, we would subtract the distance of Wave 1, which is $10.00, from the high of Wave 4, which is $138.00, to give us a target (mentioned above) of $128.00 (approximate values, of course).

It would be very surprising – though of course not impossible – if this was a bear trap, so any move back above $135.00 would hint that the tables had turned to favor a trap.

As always, let’s keep watching to see how this plays out.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

2 Comments

2 Responses to “Technician Edge: Euro Breaks Support and Downside Targets”

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  2. forex_cat Says:

    Good blog.
    very interesting.
    Please hold out in the future.

    …(I'd be pleased if you exchange reciprocal link with me.)
    my blog:
    http://forex-chart-analysis-and-a-cat.blogspot.com/