The Euro is experiencing a nice (though not unexpected bounce). Given its speed and intensity, Euro bulls hope that this is the beginning of a new uptrend. Euro bears are content in their knowledge that the currency is still in a massive downtrend and that this up move is no more than an opportunity to add to short positions. We are neither bulls nor bears… we respond to what price tells us. And here, price is telling us that the bears are correct (for now).
While the Euro has indeed experienced a strong bounce, it has not yet eclipsed the 38% retracement level (much less the halfway mark) of the most recent down leg. Further, it is running into the previous support zone (now resistance) first tested from the upside around October 4, 2011. Unless and until price can clear these levels, all of the yapping about Euro 1.50 is much adoo about nothing.
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