Thursday, March 18, 2010

The Trend Returns...

Dollar is rallying in an impulsive looking fashion. The primary bearish trend looks to be returning again to the EUR/USD in a big way with a drop over the last 2 days of over 200 pips. The count looks to be close to the end of an extended 3rd wave as I type, or possibly the end of the 5th wave. The movement so far has sliced cleanly through all resistance levels except for those near last months lows (1.3434 or so)... a hallmark of an impulsive move.

I will be posting an updated longer term view once we have a completed 5 waves down on the 15 min scale, but wanted to show the fibonacci fans that I showed yesterday at the 15 min scale, and how well the move down has adhered to them as support. These are now a permanent part of my toolbag. Correctly placing can be a bit nuanced, so will post some general guidelines when I get a moment.

Bottom line: Wave 4 (or wave B) likely ended at the top near 1.3820, and we are now in wave 5 (or wave c). GBP/USD so far is having a muted response. USD/CHF is moving up in a 3 wave move so far. Ideally, the rest of these currencies will join the EUR/USD, although they may hit nominal new extremes while EUR/USD does not in a second wave correction, creating a divergence that itself would be bullish dollar... but I am getting ahead of myself.
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