Long position closed for 20 point loss.

I went long near support at the hourly EMA10 and the rising trend line. Hourlies and Hourly RSI remain bullish, and I believe a move to 1.3745 is highly likely. Stop set wide at 1.3568, but will look for an exit on an hourly close below the rising trendline, currently at 1.3655, near my entry.

Hourly Chart:

The pair is starting to rebound and the RSI is bullish and very supportive of this move. Both price and RSI are supported by rising trend lines. I expect resistance at 1.3745 to be tested, and if broken a quick move to 1.3850, near the daily EMA10, may follow.

I’m still sidelined, but feel a bit tempted to join the long side for a short term trade, but not at the current (1.37) level which is near the highs of the hourly range. Would prefer to enter near 1.3665, near the support trend line, and am content to wait for that level, or stay sidelined otherwise. The hourlies are still a bit mixed relative to their EMA10, and caution is advised. We could easily see another breakdown and a retest of 1.3585 support.

My long term plan is to establish another short position, but I have to be careful since we may well see a powerful short covering rally that could take us easily all the way up to 1.45. This would take a few days of course, but would make it difficult to set a short trade with a reasonably tight stop. The potential for such a strong rebound makes the long trade attractive.

Support: 1.3665 HSpptRsst   1.3585 SpptRsst   1.3540 ChannelTLSppt

Resistance: 1.3745 SpptRsst, DFibo38  1.3850 HSpptRsst   1.4025 HSpptRsst

RSI: Hrly: bullish, supported by rising TL, Dly: bearish, capped by decl. TL, o/s

Hourly Chart:

We are still waiting for Q4/09 earnings reports to come in, only 71% have reported so far. But based on current estimates it is likely that we’re seeing P/E ratios return to normal after having spiked to levels over 100 for several months. As of now, annualized (12-month) earnings have rebounded back to about 50, which brought the P/E ratio back to about 22. Time will tell if those high earnings are sustainable, I personally believe they aren’t and we’ll see another increase in the P/E ratio, and eventually a fall in price balancing that rise. Below are the charts that incorporate the 4th quarter estimates.

Price and P/E Ratio Chart:

Price and Earnings Chart:

1.3745 gave way and the pair is now breaking below the 1.3650 range, which was the measured target (Fibo extension) of the move that started at 1.510 in early Decmber last year. Price is currently at 1.3615 but hourly RSI shows a strong triple bullish divergence, a sign that a sizable bounce may be in store soon. I may be looking for a short term long-trade if there is confirmation of that bounce starting, at the moment I’m not in the mood to catch a falling knife. There is trendline support coming in on the daily chart at around 1.3540, not sure if that will be reached today. Daily RSI is oversold. Sidelined until the end of trading for sure.

Support: 1.3575 SpptRsst   1.3540 ChannelTLSppt   1.3422 L-5-18

Resistance: 1.3850 HSpptRsst   1.4025 HSpptRsst   1.4190 HSpptRsst

RSI: Hrly: 3x bullish div., Dly: bearish, capped by decl. TL, o/s

Hourly Chart:

Daily Chart:

Close enough. I just closed my short position at 1.3760 for a nice 636 point profit. Likely sidelined for a while to see price action develop in the 1.3650..1.3750 area. Looking for another opportunity to sell the big next rally.

The ECB left rates at 1% and the EUR/USD made new lows, currently at 1.3780. I expect prices to slide further towards key support at 1.3745, possibly even below that level. This could be the final “capitulation move” of this multi-day downleg and I expect a sizable correction soon. But the near term continues to be very bearish despite heavily oversold RSIs (both hourly and daily).

My short position is nearing its target. I tightened my stop to 1.4055.

Support: 1.3745 DFibo38   1.3665 FiboExt of Dly Move   1.3422 L-5-18

Resistance: 1.3850 HSpptRsst   1.4025 HSpptRsst   1.4190 HSpptRsst

RSI: Hrly: bearish and very o/s, Dly: bearish, capped by decl. TL, near o/s

Hourly Chart:

The bullish correction made it exactly to the widely watched daily EMA10 and reversed sharply after hitting it. Hourlies are looking increasingly bearish now and we may have seen the end of this correction before even challenging 1.42. I continue to believe that this second downleg on the daily chart will move all the way to 1.3650..1.3750 without any major corrections, since so many traders are just waiting for an opportunity to go short and join the downtrend, the dailies are that bearish right now. So any push higher is greeted with selling interest.

Hourly RSI has turned bearish again. I believe we’re going to see a push to 1.3850 and below soon. The correction that unfolded over the last 3 days does not look convincing enough, doesn’t have the right shape for a sizable move that could extend to 1.42. Price never took the time to consolidate sideways above the hourly EMA10, it just moved up in a straight line with a constant slope, often a pattern that just doesn’t have the strength to push very far and ends with a sharp downturn.

I’m staying short, target 1.3755, stop unmoved at 1.4350 but will tighten on a return to 1.40, in which case chances are high for a move towards 1.42.

Support: 1.3830 L-7-8   1.3745 DFibo38   1.3665 FiboExt of Dly Move

Resistance: 1.3986 HSpptRsst   1.4025 HSpptRsst   1.4130 HSpptRsst

RSI: Hrly: bearish, Dly: bearish, capped by decl. TL, near o/s

Hourly Chart:

Daily Chart:

The downward trend stalled at 1.3850, and price is consolidating above the hourly EMA10. I expect this correction to continue throughout the Asian session. The correction has so far failed to seriously test support at 1.3850, so I’m expecting that to happen eventually. The hourlies don’t look like they bottomed at 1.3850, a retest of that level is likely.

Hourly RSI is near overbought and resistance. Upward momentum is weak. 1.3850 really isn’t strong support, and 1.3660… 1.3740 should be the target of this downleg. Staying short.

Support: 1.3830 L-7-8   1.3745 DFibo38   1.3665 FiboExt of Dly Move

Resistance: 1.3986 HSpptRsst   1.4045 HSpptRsst   1.4130 HSpptRsst

RSI: Hrly: mildly bullish but near o/b, Dly: bearish, capped by decl. TL, near o/s

Hourly Chart:

We’re likely to close the week on a bearish note. New hourly and daily lows are still being made, and there is a good chance for a final breakdown soon. Prices remain capped by the declining trend line and are unable to even rally close to it. RSI is bearish but has remained above oversold. There is no indication that this downtrend is stopping anytime soon ahead of 1.3745.

Support: 1.3830 L-7-8   1.3745 DFibo38   1.3665 FiboExt of Dly Move

Resistance: 1.3986 HSpptRsst   1.4045 HSpptRsst   1.4130 HSpptRsst

RSI: Hrly: bearish, Dly: bearish, capped by decl. TL, near o/s

Hourly Chart: