EUR/USD – 1.1527

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 has surged again after brief pullback to 1.1370 last week, adding credence to our bullish view that the upmove from 1.0340 low is still in progress and indicated upside targets at 1.1480-85 (50% projection of 1.0570-1.1296 measuring from 1.11190) and 1.1565-70 (61.8% projection) had been met, upside bias remains for this move to extend headway to previous chart resistance at 1.1616, then 1.1660, however, reckon another previous resistance at 1.1714 would hold on first testing due to near term overbought condition and price should falter below 1.1800-10, risk from there is seen for a retreat later.

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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 initial pullback 1.1475-80 is likely, reckon downside would be limited to 1.1435 minor support and bring another rise later. Below 1.1435 would defer and bring test of said support at 1.1370 (last week’s low) but only break there would signal a temporary top is formed instead, bring correction to 1.1312 support, however, downside should be limited to 1.1250 and price should stay well above support at 1.1109-19, then euro shall head north again.

Recommendation: 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.

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