EUR/USD basket correlation suggests dips to be bought
DXY (USD Index) - although the index traded to the highest level in six days yesterday, our resistance barrier of 103.38-103.42 stalled buying interest. We are assessed as trading within the BC leg of a Gartley formation. A common retracement level is 38.2% of the last decline. This is located at 103.93. My bias is to sell into rallies.
Euro Basket - the move to the downside has been aggressive. We have a bespoke support zone between 568 and 567. The previous support level from October 9 is located at 565. I can see a bearish Elliott Wave count (5 waves). This would suggest we will soon have a corrective move higher. Although there is ample scope for further losses, I look to 568-565 to attract buying interest. My bias is to buy into dips.
Correlation suggests limited downside for EUR/USD.
EUR/USD - continued downward momentum from the November 29 swing high of 1.1017 resulted in the major currency pair posting four negative days in succession. Bespoke support is located between 1.0766 and 1.0763. The projected support barrier for the AB leg of a Bat formation is located at 1.0763.
Conclusion – although there is ample scope for further losses, I look for dips to be bought. 1.0763 is prime support.
Resistance: 1.0852 (swing low), 1.0965 (swing high), 1.1017 (last week's peak)
Support: 1.0766-63 (bespoke), 1.0763 (AB), 1.0656 (swing low)
Euro Basket - the move to the downside has been aggressive. We have a bespoke support zone between 568 and 567. The previous support level from October 9 is located at 565. I can see a bearish Elliott Wave count (5 waves). This would suggest we will soon have a corrective move higher. Although there is ample scope for further losses, I look to 568-565 to attract buying interest. My bias is to buy into dips.
Correlation suggests limited downside for EUR/USD.
EUR/USD - continued downward momentum from the November 29 swing high of 1.1017 resulted in the major currency pair posting four negative days in succession. Bespoke support is located between 1.0766 and 1.0763. The projected support barrier for the AB leg of a Bat formation is located at 1.0763.
Conclusion – although there is ample scope for further losses, I look for dips to be bought. 1.0763 is prime support.
Resistance: 1.0852 (swing low), 1.0965 (swing high), 1.1017 (last week's peak)
Support: 1.0766-63 (bespoke), 1.0763 (AB), 1.0656 (swing low)