EURUSD Failure Renders Rebound Corrective, Re-exposes Major Bear

December 8, 2016 3:36AM CST


The market's failure this morning below Tue's 1.0699 minor corrective low and area of former resistance-turned-support confirms a bearish divergence in momentum that defines today's 1.0874 high as the end of the rally attempt from 04-Dec's 1.0506 low and 3-wave recovery attempt from 24-Nov's 1.0518 low labeled in the 240-min chart below.  Left unaltered by resumed strength above 1.0874 , this 3-wave recovery attempt is considered another corrective/consolidative event discussed in Tue's Technical Blog that warns of a resumption of the secular bear trend to new lows below 1.0506 and probably new 14-YEAR lows below Mar'15's 1.0462 low.  In this regard 1.0874 is considered our new short-term risk parameter from which shorter-term traders with tighter risk profiles can objectively rebase and managed the risk of a resumed bearish policy.

Euro Index 240 min

Euro Index Daily

The daily chart above shows the market's total rejection of an area of former support-turned-resistance around 25-Oct's 1.0850 low consistent with a broader bearish count.  On a daily close-only basis below the market's failure from a Fibonacci minimum 38.2% retrace of even Nov's 1.1139 - 1.0553-portion of the broader downtrend from May's 1.1617 high underscores the overall weakness and vulnerability of this market consistent with a broader bearish count.

Euro Index Daily

Euro Index Weekly

Finally and from a long-term perspective shown in the weekly (above) and monthly (below) log scale charts, the mere lateral price action from Mar'15's 1.0462 low is very likely just corrective/consolidative ahead of an eventual resumption of the secular bear trend to new lows below 1.0462.  The market simply has not provided any evidence to counter this long-term bearish count that we fully expect to produce the lowest prices since Jan 2003.  And as a result of today's price action, such sub-1.0462 levels may trade before today's 1.0874 high is broken.

In sum, a bearish policy remains advised for longer-term players with strength above at least 1.0874 and preferably 1.1146 required to threaten or negate this call.  Shorter-term traders with tighter risk profiles who stepped aside from bearish exposure following Mon's bullish divergence in short-term momentum are advised to re-establish a bearish policy from 1.0650 OB with strength above 1.0875 required to negate this call.  We anticipate a resumption of the secular bear trend to new and potentially significant lows below 1.0462.

Euro Index Monthly


The Index's bullish divergence in short-term mo above yesterday's 100.59 corrective high and area of former support-turned-resistance presents and equal but inverted technical construct to that detailed above for the Euro.  This short-term bullish divergence in mo defines today's 99.43 low as the end of a suspected 3-wave and thus corrective sell-off attempt consistent with our long-term bullish count calling for at least one more round of new highs above 24-Nov's 102.05 high.  Per such 99.43 is considered our new short-term risk parameter from which shorter-term traders are advised to objectively rebase and manage the risk of a resumed bullish policy.

Dollar Index 240 min

Dollar Index Daily

On any broader scale like a daily basis above or weekly basis below, the trend remains decidedly up.  Weakness below AT LEAST 99.43 and preferably 04-Nov's 96.89 larger-degree corrective low and key risk parameter is required to threaten or negate a bullish count.  These issues considered, longer-term players remain advised to maintain a bullish policy with 99.43 and/or 96.89 considered the risk parameters the market needs to break to pare and/or cover bullish exposure.  Shorter-term traders who were advised to step aside from bullish exposure following Mon's bearish divergence in short-term mo below 100.64 are advised to return to a bullish camp and first approach setback attempts to the 100.75-area OB as corrective buying opportunities with a failure below 99.43 required to move back to the sidelines.  We anticipate a resumption of the secular uptrend to new highs above 102.05.

Dollar Index Weekly

Dollar Index Quarterly

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