Feb 20, 2009 8:00 pm Est.
Casey Stubbs- Winners Edge Trading
The week ended with a bang with a huge move with the Euro gaining 250 pips on the day. Is this a bull move for the Euro or just a correction in the current downward trend? What caused such a move and so fast? One report said that as the price begin to move higher the price was hitting stop losses which ignited a buying frenzy in the Euro. I tend to believe that because where else would all that money to move the Euro higher come in all of the sudden.
Is it that finally the supply of Dollars is becoming abundant and that this has finally caught up to the Dollar and now we are going to see a massive sell of in the Dollar for a long time to come. I believe this is true and we will see a massive dollar sell of however, I do not know if that is what is happening right now.
So right now we can’t say whether this is a correction or a reversal. We will just watch the levels and let the markets tell us what we are going to do.
If you look at the daily chart and you plot a Fibonacci Retracement from the high at 1.4700 you can see that we could have a correction to the 1.3617 level to get to the 50% level. Or a reversal we would pass the .100 and go all the way past 1.4700.
Or you could look at the 4hr chart and plot the Fibonacci Retractment at the recent high of 1.3100 and you can see that we just bounced off of the .618 retracement level and slowly headed back down. So, we will see what the market does with the .618 level early in the week. If it bounces off that we could be headed back down to challenge the 1.2330 low in late October.
So where are we headed from here? If the pair goes through the .618 on the 4hr chart, watch the resistance of 1.2941 to see what the market does with that then if the market past that watch the 1.3100 level. If we go through the 1.3100 we are probably headed to the .382 or .500 Fibonacci Retracement on the daily chart.
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