November 17th, 2008

EURUSD closed last week at 1.2603, the lowest weekly close of 2008 and the lowest weekly close since August 2006.  Although the trend clearly remains to the downside, there is developing evidence on both the daily and weekly charts suggesting a correction may be near.  As of this writing, daily prices have failed to break the October 28, 2008 low of 1.2328, as on that day prices closed at 1.2805, well off the 1.2328 low witnessed earlier on that day.  The next attempt of the sub 1.2400 area did not occurr until 2 weeks later (another hint ) on November 13th with the 1.2387 low, and here too prices closed substantially higher on the day at 1.2785.  Then, the MACD and RSI price divergence on the daily suggest a correction is near. Now, as to the intraday outlook, Friday’s fall from 1.2798 is complete at today’s 1.2513 low, as prices will now move within a 1.2622-1.2689 consolidation zone before another attempt to the downside.  As to the upside, a 1 hour open and close above 1.2731 confirms further upside with Friday’s 1.2798 followed by 1.2925 as the objective, however, trendline resistence from October 30, 2008 high at 1.3298 comes in at 1.2770 today.   With regard to the the medium term fall from the September 22, 2008 high, ONLY a daily open and close above 1.3298 will complete this fall while 1.2328 holds, as prices will then move within a 1.3298-1.3893 consolidation zone before another attempt to the downside.  As to the downside, a daily close below 1.2556 confirms another test of the sub 1.2400 levels with a sustained break of 1.2328 targeting 1.2132 in the days ahead.  The broad outlook favors much lower prices in the months ahead, as a monthly close below 1.2756 confirming further downside within a 1.1210-1.3054 zone in the months ahead.   

More updates later. RW