February 27, 2010

EUR/USD Analysis - 27 February 2009

I'm back from my extended holiday in Thailand and am ready to start blogging again. Thailand was amazing by the way and I will definitely be going back later in the year. Thanks to Matt, one of my blog readers, for showing me round Phuket. I had a great time.

I want to start by looking at the EUR/USD pair. Before I left I wrote this post on 19 January explaining why you should look out for a breakout below 1.4218 and 1.4141. Well as it turned out the price fell sharply and fell below these two levels shortly after I wrote this post, and my prediction of a significant fall has actually come true.

However we are now at a very interesting point and it's not easy to predict where we go from here. If you go back to the low of 2009, ie the beginning of March, and plot fibonacci levels based on the highest point which occurred in November of last year, you can see that the price has hit the highly significant 61.8% level already. This level was around 1.3483 and the price has since rebounded slightly to 1.3616.

So this fibonacci level could act as a crucial support level and we may well see the price slowly creep upwards towards the EMA (200), which currently stands at 1.4218. Indeed I think this is most likely scenario, but if the price were to close below 1.3483 in the coming weeks, then it could easily retest last year's lows in my opinion.

Anyway going back to my January prediction, it's worth noting how much money you can potentially make if you look for possible breakouts on the longer term charts. These two levels were highly significant and once they were taken out, there was always likely to be  heavy fall. You don't always have to trade the short-term charts. Just a handful of these breakout trades can generate some very healthy profits.



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2 Comments on EUR/USD Analysis - 27 February 2009 »

February 27, 2010

Jakob @ 4:08 pm:

About time you got back James. I hope you enjoyed Thailand. I was there about two years ago, with my girlfriend. Amazing place. Now back to posting and trading!

March 31, 2010

Don Antonius @ Currency Day Trading @ 11:36 pm:

James, I think you are right. The finonacci is showing a testing towards the 1.30 level. Which we had in the Eur/Usd last 2 weeks.

It seens that the pair has stabalised around 1.35 level. I do think we are going to break through the 1.30 level in the comming months. The Euro will be under pressure when the media start to zoom in on the deficits of Portugal and Spain.

Since your last post I have started to look at fibonacci more closely. It seems that I have underestemated it.

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