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Big Picture This is not investment advice, but I just want to point out some things that I see in the bigger picture. Taking into consideration all the positive data that has been coming out for the US economy, have a look at the above WEEKLY chart.Firstly, you'll notice there is some serious MACD divergence on that last October / December upmove, which is why I've been saying it was a weaker rally than then one that preceded it in Feb - May. Secondly, you could say that the December rally was a failed attempt to retest the March 2005 high in the 1.3400 level. So where's it gonna go? Well if that MACD divergence starts playing out then I have two targets I'm thinking about - if you Fib the whole entire 2006 upmove, look how the 50% line lines up perfectly with the support that preceded the October rally, and again several times before. Why is that? Magic?? No! It's because the banks are fib and pivot point traders, that's why.And above that, the 38.2 AND 138.2 Fib Extention more or less line up with some other major supports there. Also, the 61.8 FE above I think would be a good target it we rally again (we already hit it once so maybe thats the end of that, in fact it missed it by 5 pips so the market wasn't willing to cross 1.3050 on the 23rd). So that makes this whole little rally starting on the 11th look like a retracement to the 38.2 fib (from Dec high to Jan low), which is exactly where it hit. So in my mind, I'm thinking that 1.3050 is as high as it will go up, and below 1.2700 (38.2 fib + 138.2 FE) and ultimately 1.2550 (161.8 FE) and 1.2500 (50% line) are all good targets. Also theres the rising trendline which will hit around 1.2800 I think. This would take weeks to play out of course.These are just the ramblings of a newby though, so take all the above with a pinch of salt. |
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