As expected, the euro continued moving south, and reached a new 14-month low at 1.2815 during today's Asian session. This is another step towards the long-awaited, very important test of 1.2786.
The targets for the current falling move are the support area 1.2804/10 first (which was almost reached), ahead of the key long term Fibonacci level at 1.2786. In case the price actually tests this level, we need to keep all our senses on high alert, looking for clues to see if there is going to be a break or a rebound from this level. We need to check indicators, candles, closing prices, anything that may help us determine which is more probable, a break, or a rebound. A rebound from such a key level could be followed by a sizable rising move of hundreds of pips. But in case this level gives way, the euro will be expected to continue moving lower, targeting 1.2753, 1.2716 & 1.2689, but the real target for such break would be the next, or actually the last key retracement is the Marji 71.4% at 1.2599.
On the other hand, resistance levels start were the falling trend line from August 15th high meets the micro term Fibonacci 50% retracement at 1.2904. A break above this level would be fantastic for the short term bulls, and would force us to stop waiting for the 1.2786 test. Although this level is very important, we will have to worry about 2 levels just above it at 1.2925 & 1.2942, and in case of breaking 1.2904 we must watch both levels just to make sure they will not cap the bullish move expected as a result of breaking the key resistance at 1.2904. If this gate is opened for the bulls, they will be expected to continue marching towards the short term retracement levels which start at 1.2946 and stretch all the way up to 1.3060! At the moment, there is no reason to believe the euro is capable of breaking above 1.3060, but in case it does, that would be excellent for the short & medium term bulls. First target for this break, in case it actually happens, would be 1.3153.
Attached Chart(s):
Support:
• 1.2815: today's 14-month low.
• 1.2804/10: a small support area combined of the daily lows for July 4th & 7th 2013.
• 1.2786: the long term Fibonacci 61.8% calculated for the whole gigantic move from 2012 yearly low 1.2041 to 2014 yearly high 1.3991. This is a key level for the long term.
• 1.2753: July 8h 2013 daily low, and major bottom.
• 1.2716: Nov 7th daily low.
• 1.2689: Nov 8th daily low.
• 1.2599: the long term Marji 71.4% calculated for the whole gigantic move from 2012 yearly low 1.2041 to 2014 yearly high 1.3991. This is the last key retracement level for the long term.
Resistance:
• 1.2904: an important level which combines the falling trend line from August 15th high, with the micro term Fibonacci 50% calculated for the drop from September 16th high 1.2993 to today’s 14-month low 1.2815.
• 1.2925: micro term Fibonacci 61.8% calculated for the drop from September 16th high 1.2993 to today’s 14-month low 1.2815.
• 1.2942: micro term Marji 71.4% calculated for the drop from September 16th high 1.2993 to today’s 14-month low 1.2815.
• 1.2946: short term Fibonacci 38.2% calculated for the drop from September 3rd high 1.3158 to today’s 14-month low 1.2815.
• 1.2987: short term Fibonacci 50% calculated for the drop from September 3rd high 1.3158 to today’s 14-month low 1.2815.
• 1.3027: short term Fibonacci 61.8% calculated for the drop from September 3rd high 1.3158 to today’s 14-month low 1.2815.
• 1.3060: short term Marji 71.4% calculated for the drop from September 3rd high 1.3158 to today’s 14-month low 1.2815.
• 1.3153: medium term Fibonacci 38.2% calculated for the drop from June 30th high 1.3699 to today’s 14-month low 1.2815.
Trend:
• Short term: Down, as long as the price is below 1.2904.
• Medium term: Down, as long as the price is below 1.3361.
• Long term: Down, as long as the price is below 1.4109.
Article originally appeared on MarjiFX.com