Recent wave: wave v of (C) ended at 94.12 and major correction in wave A is unfolding for gain to 135.00
Trend: Up
Original strategy:
Sold at 131.05, Target: 129.05, Stop: 131.65
Position: - Short at 131.05
Target: - 129.05
Stop:- 131.65
New strategy :
Sell at 131.05, Target: 129.05, Stop: 131.65
Position: - Short at 131.05
Target: - 129.05
Stop:- 131.65
Although the single currency has risen again after brief pullback and near term upside risk remains for marginal gain from here, as outlook remains consolidative, still reckon upside would be limited to indicated strong resistance at 131.30-40 and bring selloff in wave c later this month. Below 130.00-05 would suggest top is possibly formed and bring test of 129.40, break there would confirm and weakness to 128.91 (Friday's low) would follow, however, below there is needed to add credence to this view, then further fall towards strong support at 128.00-02 would follow but only a firm breach below this level would confirm the wave c decline has commenced.
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 holding on to our short position entered at 131.05. A firm break above 131.30-40 would shift risk to upside for gain to 131.90-00 and possibly towards 132.40-50, however, as broad outlook is still consolidative, reckon upside would still be limited to 132.80-85 and bring another decline later this month to aforesaid downside targets.
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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