Monthly

Monthly trend is bullish, and now market is struggling with 0.618 Fib resistance from the one side and previous consolidation in 1.60-1.70 from the other. Fib resistance itself does not worry me much, because market has touched it once already and now this level becomes weaker. The next monthly target is 0.618 Fib expansion at 1.64 area from ABC-bottom pattern (purple Z-line) that makes an Accordance with 0.786 Fib resistance level. This combination creates stronger resistance, comparing to the single Fib resistance. Also take a note that the blue line on the chart is out Oscillator Devinateur, that shows level of overbought and it just above our target. The next target is 1.7766 – 100% expansion, but it’s beyond the overbought, so it’s not “Logical” currently. The main question – will market show the retracement to the downside, before reaching of the 1.64 target…

Weekly

Weekly trend is also bullish. We can see, that market has closed above 0.618 Fib resistance, and as I’ve said, it has touched it already before, so this level is erased, I suppose. The major resistance was from monthly pivot resistance 1 rather (red line) than from Fib resistance. The gold line and lime line are monthly pivot point at 1.5644 and monthly pivot support 1at 1.5366 . Take a note, that pivot has not been traded yet by the market, but odds suggest that this happens in 70% of cases. This is a +1 point in favor of possible retracement lower.

Now, look at a purple Z-line, this is more recent ABC-bottom pattern than on monthly chart. But 0.618 Expansion target is in the same area – around 1.64. Retracement from AB move was shallow – just 0.382 retracement. IT makes me think, that market can reach 100% Fib expansion target around 1.7050. We can see that CD leg has the same speed as AB, at least currently. This fact adds some confidence to the possible continuation of upward move. At the same time we see that weekly overbought level that marked by blue line of Oscillator Devinateur around 1.6450-1.65 area. So, it’s a bit early to talk about 1.7050 target…

#1

Now let’s take a look at weekly support levels. First of all, if bulls are still in charge the monthly pivot point at 1.5644 should hold the market. Except the monthly pivot (gold line), it surrounded with Fib Conjunction support 1.5608-1.5667 (black and red line). This is really strong support.

If, somehow, this level will be broken, the next strong support is 1.5366-1.5432 – that includes monthly pivot support 1 and Fib Conjunction support but from other lows (purple and red).

Personally, I think that retracement (if it will happen at all) should finish at the first area. There is couple of reasons for this. First, market has touched 1.60-1.61 area twice, and there was deep retracement between first and second touch. If market intends to break this area retracement is usually smaller between second touch and the breakout. And the first area of support is very suitable for this purpose. Second, monthly pivot should hold the market is bulls are still control situation.

#2

Daily

1-hour

Hourly trend is bearish and it will remain bearish till 1.6060 area due to MACD Devinateur (red indicator). Now, the suitable area for enter short is Fib Conjunction resistance at 1.6020-1.6030 area. Stop should be placed above 1.6080. We can’t say definitely for now will 3-Drive sell work or not, even it will not, the tight stop and excellent risk/reward ratio allow us to try to enter short.

Conclusion: On the long term I expect that market should reach 1.64 target. At the same time we can see retracement to the downside during the coming week. I think that we can try to enter short from 1.6025 area, stop above 1.6080 and nearest target at 1.5750, and even possible to 1.5640. Even if 3-drive sell pattern will not work accordingly, tight and logical stop allows us take risk reasonable and risk/reward ratio is very attractive.