September 16, 2009

EUR/USD Rejects 61.8% Fibonacci Level (1.4622)

At the time of writing the EUR/USD currently stands at 1.4701 and just keeps on going higher. The upward trend is certainly still in place because the Supertrend indicator is still green, ie bullish, on both the daily and weekly charts, and has been since May. Furthermore you can see that the EMA (200) is rising on both of these time frames.

So how much further can the EUR/USD go?

Well it's interesting to note that if you plot some fibonacci retracement levels on your charts based on the high point of 1.6038 and the low point of 1.2330, you can see that the price has broken through all the major resistance points, ie 23.6%, 38.2% and 50%.

Plus it has now broken through the 61.8% resistance level (1.4622), which I consider to be the most important one because in a lot of cases you will find that this acts as a major resistance level. So the fact that the price has gone straight through this level suggests that there is now plenty of upside left in this move.

Of course fibonacci analysis can never be 100% reliable but I certainly wouldn't bet against a move up towards the 1.50 level.



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1 Comment on EUR/USD Rejects 61.8% Fibonacci Level (1.4622) »

September 16, 2009

Jakob @ 5:26 pm:

Hi James. I would be careful to trust too much on Fibonacci at the current moment. I do agree that it can be a useful tool to a certain point, but don’t jump to conclusions. There is definitely a strong resistance level at 1.4725 (or close to) from the last high in the same level, in addition to the 1.4700 being a psychological number as well. And as you mention, we should not forget about the Fibonacci level, which is not too far away, although the level has been broken. But yes, at the current moment technical indicators seems to play less importance. However, I think we are seeing some larger institutions playing with the retail traders at the moment. My best guess is that we will see the EUR/USD keep going up for some 50 – 80 pips more, breaking all the important levels, as a result of stop loss hunting. When retail traders have been stopped out, they will get the idea that the pair will keep its bullish momentum, and go long, and then we might see a reversal. This is where I will put my money ? Just a thought. I will probably be looking for a short entry around 1.4750 – 1.4800, with a stop loss of something in the range of 50 – 100 pips and an open take profit. Let’s see who will get it right ?

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