Wednesday, 4 July 2012

EURUSD before the rate cut.....

Todays focus is on EUR/USD. As we said in a previous post, this pair has broken the green support line and looks like it has started a new downward move to test the lows. We also mentioned that in the short term it had reached the middle pitchfork support and that a bounce was imminent. And that is what it really happened. Now that EUR/USD has back tested the green upward trend line, has found resistance in the upper pitchfork. Tomorrow ECB is expected to cut the key interest rate by 0,25 basis points. Our view is bearish with a stop above 1,2750 and target at least 1,24. Whatever decision is taken tomorrow, our view is downward biased with a stop limit at 1,2750. Break of 1,24 will give targets below 1,20. 

From an elliott wave perspective, the rise has been overlapping, thus corrective, and the decline impulsive. This characteristic added to our technical view, supports our bearish feelings towards EUR/USD.

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