EUR/USD – 1.3125

EUR/USD:  Wave (B) ended at 1.5145 and wave I of (C) ended at 1.1876

Euro continued to move higher last week to as high as 1.3233 this morning, suggesting a temporary low is formed (as wave i of (3)) and consolidation with mild upside bias is seen for retracement of the intermediate fall from 1.4248 (wave (2) top) is underway and gain to 1.3244 (38.2% Fibonacci retracement of 1.4248-1.2624) and possibly 1.3300, however, reckon upside would be limited to 1.3436 (50% Fibonacci retracement) and resistance at 1.3550 should remain intact, bring another selloff next month.

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 has possibly ended at 1.4940, hence wave III is now in progress with 1, 2, (1), (2) labeled as indicated.

On the downside, whilst pullback to 1.3000-10 cannot be ruled out, last week’s low at 1.2854 should limit downside and bring another rebound to aforesaid upside targets. Only below said support at 1.2624 would signal the decline from 1.4940 (wave II top) is still in progress and wave (3) of 3 should extend towards 1.2511-15 (1.236 times projection of wave (1) measuring from top of wave (2) at 1.4248 and 100% projection of 1.4248-1.3213 measuring from 1.3550), however, reckon 1.2340-45 (100% projection of 1.3199-1.2662 measuring from 1.2879) would hold.

Recommendation: Buy at 1.2950 for 1.3200 with stop below 1.2850.

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 should be limited to 1.5145, bring wave III decline later.