EUR/USD: Short term chop zone

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Weekly Insight
(analysis by Al “Gunny” Davis) 
EUR/USD: Short term chop zone
REVIEW

At the time of last week’s analysis the EUR/USD was trading at 1.29298.  Our bias called for the EUR/USD to decline & retest the bearish target zones of 1.28490 – 1.28070 and potentially 1.27830 – 1.26630.  We were then looking for the EUR/USD to continue its rally up to the bullish target zone of 1.30470 – 1.30770.  We anticipated a close & retest that stayed above 1.30470 – 1.30770 would then open the way up to the bullish target zone of 1.31363 – 1.32366.  Our exit strategy called for a larger decline towards our bearish target zones of 1.25070 – 1.23897 and 1.23170 – 1.22817.    The EUR/USD declined to a low of 1.28532 on 1/22/12 and then rallied to a high of 1.32290 on 1/27/12.  The EUR/USD closed the week at 1.32189.

In our timing analysis we anticipated a minor swing point would occur between 1/24/12 – 1/26/12 and also between 1/31/12 – 2/1/12.

ANALYSIS

Our long term price analysis still remains bullish as the waves appear to be unfolding in a larger degree 5-wave corrective pattern.   We’re anticipating a long term rally that will trade towards and potentially beyond the bullish target zone of 1.57770 – 1.60380.  Our bias calls for the EUR/USD to rally up to the bullish target zones of 1.33070 – 1.33470 and potentially 1.34370 – 1.34890.  We will then look for the EUR/USD to decline down to the target zone of 1.30770 – 1.30470 and potentially down to 1.2977 – 1.2937.   Our exit strategy calls for the EUR/USD to continue its rally towards our bullish target zones of 1.36090 – 1.36930.

Our long term momentum indicators are mixed and signal a potential sideways choppy market or a sharp decline in the EUR/USD over the next few trading days.  The lower timeframe’s momentum indicators are overbought and we’re looking for clues and signals that will indicate a decline in the EUR/USD has begun.

TIMING

Our long term timing projections allow us to anticipate a potential significant swing point may occur between 3/4/12 & 3/18/12.  Our short term timing projections allow us to anticipate a minor swing point may occur between 1/31/12 – 2/1/12 and also between 2/4/12 – 2/7/12.  Our timing projections allow us to anticipate potential turning points in the marketplace. With our timing projections there’s a factor of +/- 2.

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