|
The Euro has been moving steadily up from its recent June 7, 2010 low of 1.1874 - a low which occurred around 60 days ago at time of writing.
While there is plenty of evidence to support this June low, I still believe the Euro has a bit further to fall, so I am looking at this current upwards move as a bear market rally, rather than the start of a new bull market just yet.
Let’s take a look at the current market action on the Euro (EC-Spotv in ProfitSource) in Chart 1 below.
Chart 1
click to enlarge
There is no doubting that this has been a significant rally – it is currently 1388 points up from the low at time of writing. Those who have studied the Euro will know that 1388 points is approximately the size of the last three bullish moves on the Euro, coming up from the March 2009 low.
Earlier this year I wrote an article comparing the previous major bear market range to the current range and I will recreate that comparison in Chart 2 below.
Chart 2
click to enlarge
Note the first two areas I have circled, showing that the 25% and 50% milestones of the previous range gave us turning points in the current range.
Also note that we are approaching the 50% milestone again. I have circled this with a question mark. For me, this is a key area for this market. If the Euro finds resistance here, I will be looking for it to resume the downwards move and head towards the 100% milestone.
If it can break above this 50% milestone, I would start to look at this upwards move as a potential new bull market. For now though, I am still looking for a top, and although the Euro has pushed past the late July turning date I was watching, early August is another good time for this market to turn.
Those of you who attended my Euro Forecasting Seminar in June would remember we used the first of the Double Bottoms from January, 2007 as part of the forecast, both in the main session and the bonus for Master Forecasting Course owners. See if you can link the second of those bottoms to Friday, August 6th, another date that might prove interesting to watch.
Be Prepared!
Mathew Barnes
|