EUR/USD – 1.0754
EUR/USD: Wave (c) of 2 ended at 1.3993 and wave 3 of III has commenced for weakness to 1.0411 (1.236 of wave 1), then 1.0000.
The single currency found decent demand at 1.0600 last week and has rallied again, dampening our bearishness and suggesting the erratic rise from 1.0493 is still in progress, hence upside risk remains for gain towards resistance at 1.0829, however, break there is needed to signal another leg of corrective rise from 1.0340 low is still in progress for further gain to resistance at 1.0873 but still reckon upside would be limited to 1.0930-35 (61.8% Fibonacci retracement of 1.1300-1.0340) and 1.1000 should hold from here, bring another decline in Q2.
Our preferred count on the daily chart remains that a wave (II) from 1.2329 ended at 1.5145 with A-leg ended at 1.4720, followed by wave B at 1.2457, the wave C from there was also a 3 legged move and is labeled as (a): 1.3739, (b): 1.2885, the wave iii of the 5-waver (c) from 1.2885 has ended at 1.4339 and wave iv is a triangle ended at 1.3878 and wave v formed a top at 1.5145. The decline from there is a 5-waver (C) with minor wave (i) of I of (C) ended at 1.4218 with wave (ii) ended at 1.4580, wave (iii) ended at 1.3267 and wave (iv) ended at 1.3692 and wave (v) ended at 1.1876, this is also the low of wave I of (C) and wave II ended at 1.4940, hence wave III is now in progress with a diagonal wave 1 ended at 1.2042, the breach of previous support at 1.1876 (wave I trough) adds credence to our view that the wave 2 has ended at 1.3993, wave 3 has commenced for further weakness to 1.0411, then towards 1.0000.
On the downside, whilst pullback to 1.0700-10 cannot be ruled out, reckon downside would be limited to 1.0650-60 and said support at 1.0600 should hold, bring another rise later. Only a daily close below this level would signal the rebound from 1.0493 low has ended, bring further fall to 1.0550 but break of 1.0525 support is needed to revive bearishness for retest of 1.0493. A drop below 1.0493 support would add credence to previous view that the rebound from 1.0340 has ended and bring further fall to indicated key support at 1.0454. A sustained break below this level would suggest the rebound from 1.0340 has ended, bring subsequent decline to 1.0390-00, then towards said recent low at 1.0340.
Recommendation: Exit short entered at 1.0740 and stand aside for this week.
Euro's long-term uptrend started from 0.8228 (26 Oct 2000) with an impulsive structure. The rise from 0.8228 to 0.9593 (5 Jan 2001) is labeled as wave I, the retreat to 0.8352 (6 Jul 2001) is wave II and the rally to 1.3670 (31 Dec 2004) is wave III. Wave IV from there ended at 1.1640 (15 Nov 2005), the subsequent upmove to 1.6040 (July 15, 2008) is treated as wave V, the major selloff from the record high of 1.6040 to 1.2329 (October 27, 2008) signals a reversal has taken place with (I) leg ended at 1.2329 and once (II) ended at 1.5145, wave (III) itself is an extended move with I: 1.1876 and complex wave II ended at 1.4902, wave III has commenced with wave 1 and 2 ended at 1.2042 and 1.3993 respectively, wave 3 of III is now unfolding for weakness towards parity.