Eur/$, Still Short But Lots of Positives Appearing

In the Jan 10th email on eur/$, said despite positives starting to appear, there was still no signs of a bottom "pattern-wise", in turn suggesting at least some further downside. Resold there (then at 1.2775), and the market has indeed continued to chop lower, reaching a low at 1.2625 last week. But many positives remain, including slowing downside momentum/technicals not confirming the recent lows (see daily macd at bottom of chart below), potential falling wedge/reversal pattern forming, and widely bearish sentiment (contrary indicator), in turn arguing that a more important bottom may indeed be nearing. Looks like the market may only need a "trigger" to get the upside going, and with such a move potentially being sharp (at least initially on short covering). So for now, would stay short but using a more aggressive stop on a close the bearish trendline since Oct (cur at 1.2850/70) to compensate for this increasing risk in the position.

Longer term, some very big picture positives are also starting to appear supporting the view that a more important low may indeed be nearing (see shorter term above). Note that the market remains supported by the base of the bearish channel since Aug and with further, long term support just below at the bullish trendline from July 2001 (currently at 1.2475/00), then the Nov 2008 low at 1.2300. Note too that the 3 wave fall from the July 2008 high at 1.6035 (A-B-C) continues to suggest that the market is within a much larger period of wide ranging/consolidating, and with the bottom of the multi-year range likely in place at the Jun 2010 low at 1.1880, and with all suggesting that further, big picture downside may be limited. Finally, time cycles within larger consolidations will often tend toward equality, with potential for another bottom within a roughly 83 week cycle occurring around this time (see on weekly chart/2nd chart below). So bottom line is that a more important bottom is seen nearing (likely for at least a few months or more), but still not enough evidence of even a nearer term low (so far), to warrant switching the longer term bias from neutral to the bullish side.

Current:
Nearer term : resold Jan 10 at 1.2775, aggressive stop on close above bear t-line since Oct (cur 1.2870).
Last : short Dec 13 at 1.3130, took profit Jan 3rd above bear t-line from Oct (1.3000, closed 1.3050).

Longer term: neutral but more important low seen nearing (not yet enough evidence of low to switch).
Last : neutral Nov 30th at 1.3445 from bearish on Sept 14th at 1.3710.