BULLISH SHORT-TERM SET UP IF IT WITHSTANDS CYPRUS NEWS
Daily momentum indicators are suggesting that price should carry out a larger rebound:
- RSI: Positive divergence at the last price low + higher highs/lows. The short-term trend remains up as long as the trend line support is not breached. The next resistance at the 50 line.
- Stochastic: From the oversold zone on March 14 has issued a bullish cross.
- MACD: Has an incipient bullish cross that needs to be confirmed next week.
I maintain the long-term scenarios discussed in my last long-term update on September 9: http://www.thewavetrading.com/2012/09/09/eurusd-update-of-the-long-term-count/
Regarding the short-term time frame (From the July 25 low):
- The corrective pattern unfolded from the July 25 low suggests that price has not established a major top at February 1 high. In my opinion a Double ZZ has established the top of a wave (A) that could belong to a larger Zig Zag up (ABC).
- From the February 1 top price has began a correction that sould unfold a downward Zig Zag. The wave (A) can be considered completed last Thursday with a bullish falling wedge.
- If bulls are able to reclaim the 20 dma and the horizontal resistance located at 1.3162 then the assumed wave (B) could reach the range of the 0.382-0.618 retracement (Maybe the 50 dma = 1.3268 could deter a larger rebound).
- A weekly Hammer candlestick is another bullish sign. In this time frame the prospect of a larger rebound depends if bulls are able to reclaim the 50 wma = 1.3128 While the major resistance is located at the 100 wma = 1.3315.
- If the assumed wave (A) has been established at last Thursday's lod we need to see a higher low therefore if the EUR is able to endure successfully the negative news from Cyprus it should hold above the 10 d ma = 1.3025 (Last Friday, for the first time during the February down leg, it has achieved an eod print above it).
Conclusion: there is a potential short-term bullish set up if tomorrow price will not collapse due to the disturbing Cyprus news.
