Let’s do a quick analysis of the Euro and see what we come up with. It’s obvious the Euro has been trending down ever since the overall high of 1.6038 making an incredible drop to 1.2329, that’s a 23% devaluation in roughly 4 months.
Using Fibonacci and measuring this incredible drop in price we get our retracement points to this move. Looking at how price has reacted to these levels we can see defined support and resistance created at or around these levels. In the example below (Figure 1) we have the Euro weekly and the downtrend measured. Highlighted you’ll see the points that the market has retraced to and each time was successively lower each time, most lately retesting the 38.2 Level or the (Short) level. I say the short level but the market can retrace to the 61.8 level and still remain a short market, its just if price can be maintained below these levels it remains in a short condition. In order for the downside pressure to be relived the market will have to break the 61.8% level and be maintained above that and well see a Long market once again.
Using Fibonacci and measuring this incredible drop in price we get our retracement points to this move. Looking at how price has reacted to these levels we can see defined support and resistance created at or around these levels. In the example below (Figure 1) we have the Euro weekly and the downtrend measured. Highlighted you’ll see the points that the market has retraced to and each time was successively lower each time, most lately retesting the 38.2 Level or the (Short) level. I say the short level but the market can retrace to the 61.8 level and still remain a short market, its just if price can be maintained below these levels it remains in a short condition. In order for the downside pressure to be relived the market will have to break the 61.8% level and be maintained above that and well see a Long market once again.
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