02/03/10 10:38 am - EURUSD: New upside rejected at Daily EMA10

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: