Date: 6 Jan 2013
FOREX Observation:
The EURUSD completed an inverse head and shoulders pattern in early
December that had been forming (bottom of left shoulder) since the
second week of 2012. Here we are exactly one year later and it is
possible that the first big move of 2013 is higher as per the completed
pattern. Price is testing the neckline as support now but the classical
pattern is considered valid as long as price is above the breakout bar
low of 12875. Objectives to think about include where the rally from the
2011 low would consist of 2 equal waves, at 13787 and the traditional
h&s objective of about 14260.
FOREX Trading Implication: Focus for now is on initiating a core long. I wrote last night
that I was looking to go long on an NFP washout in the mid-12900s. We
dipped slightly under 13000 before drifting higher to end the day
though. A slight new low can’t be ruled out, especially considering the 3
wave advance from today’s low. A Monday low would be most desirable
when one considers weekly seasonality. Speaking of seasonality, failure
to put in a low by Tuesday would leave the EURUSD vulnerable on a
monthly seasonality basis (high is first day of the month). Bottom line;
I’m looking to buy a drop below Friday’s low, probably between 12950/85
on Monday.
 |
| EU Weekly chart |
 |
| EU Daily chart |
