The EUR/USD moved out of the pitchfork channel above the 50-day moving average and has broken now the 100-day average. Indicators are oversold and we will have a short term correction now. It is hard to say if the lowest point is already behind us. We will have to see if the next down move will move past the lowest low point. It is possible that we are making an up correction wave {B} and that a last correction wave {C} will come next. We only can wait and see to be sure. That last down move would bring the Euro to the level of the previous long term correction wave [4] of the long term up move as you can see in the monthly chart, where price finds support on the 200 months' moving average. Short term we expect an extension in the {B} up wave to a level of about 1.35.
Weekly Chart: The Euro made a long term top Elliott wave [5] around $1.60 July 2008. A correction wave [A] was started, retracing almost 50% of the complete up move. Next the correction wave [B] retraced a big part of the [A] wave with extension correction waves {A} to {C}, completing wave [B]. The move down now for wave [C] made already a lower low than wave [A] and with that the wave [C] may already be complete. But, I expect that wave [C] will also have an extension and that most probably we are making now an intermediate correction wave {B} up. And I expect this correction to go up to around 1.30 to 1.35. There is room in the indicators for a further up move, probably after a short term correction.
Monthly Chart: The Euro made a long term top Elliott wave [5] around $1.60 July 2008. A correction wave [A] was started, retracing almost 50% of the complete up move. Next the correction wave [B] retraced a big part of the [A] wave, before starting the [C] wave down. Although this [C] wave made already a lower low than wave [A], now reaching the 50% retracement level and finding support on the 200-month moving average, I still do not believe that the lowest point has been reached already and that we probably get an extension of the wave [C] down. There is room in the indicators for a further move down to the level of the correction wave [4] of the long term up move. Still we must not exclude that the lowest point has been reached already and that we are starting a new long term up move.
Sylvain Vervoort http://stocata.org/
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