Talking Points
- Fails at key Gann resistance
- Near-term cyclical picture turning more negative
Unfamiliar with Gann Square Root Relationships? Learn more about them here.
The reversal last December in EUR/USD had a lot of things going for it from a long-term cyclical perspective. So much so that we are having a hard time believing that the 5 big figure decline over the first few weeks of the year is the extent of the downside correction it will produce. Admittedly the advance since early February in the Euro has proven resilient and pushed higher than we thought it would. Key resistance has held, however, as EUR/USD stopped this week at the 1.3775 1st square root relationship of the 2013 high and well below last year’s closing high of 1.3797. With the near-term cyclical outlook turning negative here we like the risk to reward of getting short the exchange rate around current levels. A move back through 1.3800 would prove our negative view is wrong.
EUR/USD Daily Chart: February 26, 2014
Charts Created using Marketscope – Prepared by Kristian Kerr
Key Event Risk in Coming Sessions:
LEVELS TO WATCH
Resistance: 1.3685 (Fibonacci), 1.3775 (Gann)
Support: 1.3655 (Gann), 1.3590 (Fibonacci)
Strategy: Sell EUR/USD on Strength
Entry: Sell EUR/USD at 1.3715
Stop: 1-day close above 1.3795
Target: 1.3540
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
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