European stocks are higher today, and helped some major currencies to hold the support against the US dollar. Over the past few sessions we could also saw some of Eur recovery, supported by the comments coming from Japan which may buy 20% of euro zone bonds in this month to help the Europe in debt crisis. With this being said, we may finally see an upward correction on Eur/Usd that may offer a short opportunity.
A significant resistance zone on any pull-back is at 1.3050-1.3150 region, where a trend line connected from August 2010 and 200 day SMA should react as a very good level for a downtrend continuation”¦if pull-back appears.
Guest post by Gregor Horvat.
In fact, on dollar index 1h chart, we can see that trend from 78.79 region is incomplete. In Elliott Wave theory an impulsive legs are structured by five waves, where a third wave is usually the most powerful wave in that sequence. On the chart below we can definitely say that move from 78.90 is a third wave, and as such, a current pull-back from 81.30 should be only a corrective wave (iv), with wave (v) yet to come. In the near-term, traders should watch out for support levels around 80.25/40 region where wave (iv) may finish and send the Eur/usd lower from 1.3050/150 region as mentioned above. We are bullish on the US dollar index as long as the market trades above 79.52 critical region.
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