New trading strategy
Hold long entered at 133.75, Target: 135.50, Stop: 133.90
Despite Friday's drop to 133.20, as the single currency found decent demand there and has rebounded today, retaining our bullishness for gain towards 135.76, however, it is necessary to see a breach of resistance at 136.00 to confirm the correction from 138.49 has ended at 131.01 and extend further rise to 137.00.
Our preferred count is that: the upmove from 127.00 is treated as the wave 3 with wave (1) of 3 ended at 138.72 and wave (2) is re-labeled as an (A)-(B)-(C) move with (A) ended at 131.01, (B) ended at 135.49 and impulsive wave (C) commenced from there and has ended at 129.02. Euro's rally after breaking indicated resistance at 132.04 signals the wave i of (3) has ended at 131.66 which followed by wave ii at 129.58, hence wave iii ended at 136.07 and wave v as well as wave 1 of (3) has ended at 138.49. Above 136.00 resistance would be the first sign that wave 3 is under way for gain to 137.35/40, break there would confirm and bring retest of 138.49-72 key resistance area.
In view of this, we are still holding on to our long position entered at 133.75 with stop now raised to the indicated level. Only below support at 133.20 would prolong choppy trading and risk weakness to 132.50 but support at 131.74 should hold.
Our larger degree count remains that wave 1 from 112.08 ended at 139.26 and wave 2 is a 3-legged move (as indicated in the attached chart) with a: 131.41, b: 136.90 and c: 127.00. Under this count, the wave 3 has commenced from 127.00 with wave (1) ended at 138.72.
On the bigger picture, we are treating the rally to 169.97 as end of wave A, then followed by a selloff in wave B (abc-x-abc) at 112.08. The wave C from there should unfolding as an impulse with wave 1 of C ended at 139.26, then the 3-legged wave 2 has ended at 127.00 and wave 3 should bring retest of 139.26, then towards 142.00.
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