Trend: Up
New strategy :
Sell at 131.30, Target: 129.00, Stop: 131.90
Despite last week's rise to 132.74, the subsequent selloff has retained our view that top has been formed at 133.82 and consolidation with downside bias is seen for weakness to 128.90-00, however, break there is needed to add credence to this count and extend decline to 128.60-65 but only a drop below support at 128.00-02 would retain bearishness and bring further fall in wave c towards 127.00 and possibly test of 126.57.
Our latest preferred count is that wave (ii) is ABC-X-ABC which ended at 123.33 and wave (iii) is unfolding with wave iii ended at 100.77, followed by wave iv at 111.57 and wave v as well as the wave (iii) has ended at 97.04, followed by wave (iv) at 111.43 and wave (v) has ended at 94.12 which is also the end of the larger degree v, this also implied the major wave (C) has also ended there, hence major correction has commenced from there with A leg unfolding in its lower degree wave c which has possibly ended at 133.82 and correction to 124.70-75 and later towards support at 119.12 would be seen later.
In view of this, we are looking to sell euro on recovery. Above 130.55-65 would bring recovery to 131.00 but previous support at 131.45-50 should cap upside and bring another selloff later to aforesaid downside target. Only above 132.00-05 would signal the retreat from 132.74 has ended and bring a retest of this level but still expect upside to be limited to 133.00 and price should falter well below resistance at 133.82.
Our preferred count is that the decline from 139.26 is wave (C) and is sub-divided into a diagonal triangle i-ii-iii-iv-v with wave i - 105.44, wave ii- 123.33, wave iii - 97.03, wave iv - 111.43, followed by the final wave v as well as the end of wave (C) at 94.12. Under this count, major correction has commenced in wave A which itself is a 3-waver (probably zig-zag) and may extend headway towards 135.00.
On the bigger picture, we are treating the rally to 169.97 as end of wave A, then selloff from 169.97 (July 2008) to 112.08 is wave (A) of B instead of end of entire wave B and then the rebound from there to 139.26 is wave (B), then wave (C) decline bought euro to as low as 94.12 and the strong rebound from there suggest this wave (C) as well as larger degree wave B has ended and major correction in larger degree wave C has commended for headway to 135.00 and possibly test of previous resistance at 139.26.
IMOH, Clement I.
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