EUR/USD Bounce Closing in on Stronger Resistance

The FX Specialist view - The recovery in EUR/USD from the Jun low has, so far, been a 3-wave affair and recently found good resistance. There is now the risk that further weakness will mean curtains for the bulls as upward momentum seeps away.

• WEEKLY CHART So far a 3-wave, corrective structure has developed from the Jun low: - it has failed just ahead of 76.4% resistance, raising questions as to whether the bull move has run its course (note how a former 76.4% level was effective in late 2009).
• DAILY CHART: After the market failed ahead of the 76.4% retracement level (no requirement for this to be tested) the continued drop below the 20-Oct 1.3696 low has provided a modest sign of momentum loss. However, more important are the current bull channel base (now under pressure) and then the 1.3333 06-Aug high, just above which resides a 38.2% pullback level – violating these supports would have more certain bearish implications. Subsequent rally attempts should then prove temporary ahead of further bear activity.

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