• Chart-Watch: Euro May Not Have Bottomed Out Yet

    By Tarun Dang on 08 Feb, 2015

    It's is an old adage in technical analysis parlance that a sharp fall does not reverse just like that. It typically tapers off producing some pullbacks/dead cat bounces before it reverses.


    Bottom-line:

    It’s an old adage in technical analysis parlance that a sharp fall does not reverse just like that. It typically tapers off producing some pullbacks/dead cat bounces before it reverses. The sharp selloff in the Euro that got accentuated with the ECB announcement of its version of QE fits the same template. As we go deep into analyzing the recent sell-off in the EurUSD, there is reason enough to suggest that one more final thrust downwards remains. This thrust will mark that an intermediate level bottom is in place. 

    Details: The following mark-up is a continuation of our count on EurUSD that we published via this chart (https://twitter.com/TheTrendWise/status/554889549839478784) from our Twitter handle on 12 Jan 2015. Around that time, even though there was a lot of chatter in the air that Euro has bottomed out, we still had this view suggesting it was not over yet. Rest is history. Going by the preferred count we have, the recent multi-year low of 1.10960, was likely the end of [iii] of a minor level 5th. So far the pullback/corrective wave [iv] following this bottom has unfolded in 3 waves forming a zigzag. Note that the preceding wave [ii] was an irregular flat, which fits nicely into the narrative that the 2 corrective waves in a 5 wave impulse alternate amongst each other in shape and complexity.

    The jitters around Greece again took hold last Friday and Euro came under renewed selling. This according to us is an early sign that final [v] wave thrust has begun. Only a climb past 1.15327 will make us review this count for other alternatives.