Euro in Position to Post Daily Reversal Top; Setting up for Correction

The Euro is under pressure at themid-session, putting it in a position to form a closing price reversal top andsetting up the market for a near-term correction.

The Euro is under pressure at themid-session, putting it in a position to form a closing price reversal top andsetting up the market for a near-term correction.

The EUR USD traded higher from the openingSunday night, buoyed by friendly comments from Chinese Premier Wen Jiabao whoemphasized support for Greece in a speech and added according to The WallStreet Journal, “China will not reduce its euro-bond holdings and Chinasupports a stable euro.”

The single-currency broke from its high andturned lower after it was reported last night that Nobel Prize-wining economist,Joseph Stigliz, warned of sovereign debt threats to the stability of the EuroRegion, eroding Jiabao’s bullish spin, and forcing investors to once again facethe reality of debt problems in Spain, Ireland and other peripheral nations.

This afternoon’s weakness has theappearance of profit-taking with no sign of a change in trend to down. A solidclosing price reversal top can, however, lead to the start of a near-termcorrection which could take some of the overbought pressure off the Euro.

Today’s break could also be a sign of atired market since the topping action is taking place so close to a majorFibonacci level at 1.3896. Besides a reversal top, a break under a major 50%level at 1.3510 will also be a sign that selling pressure is building.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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