Overnight’s break below last week’s 100.26 low reaffirms this month’s slide and leaves Thur’s 101.73 high in its wake as the latest smaller-degree corrective high the market needs to sustain losses below to avoid breaking this intermediate-term downtrend, exposing it as a 3-wave and thus corrective affair and re-exposing the secular bull to at least one more round of new highs above 103.82. In this regard 101.73 becomes our new short-term parameter from which the risk of any non-bullish decisions introduced in 05-Jan’s Technical Webcast can be objectively rebased and managed.
From a longer-term perspective 08-Dec’s 99.43 larger-degree corrective low remains intact as our key risk parameter the market is minimally required to fail below to threaten the uptrend from May’16’s 91.92 low, let alone the secular bull market that dates from Mar 2008’s 70.70 low. Indeed, the daily chart above shows this month’s sell-off attempt thus far failing to retrace even a Fibonacci minimum 38.2% of Aug-Jan’s 94.07 – 103.82 rally while the weekly chart below shows the market still above 18 MONTHS of former resistance around the 100.00-area that is now considered a huge new support candidate. IF/when a major peak/reversal threat can be considered, it’s gotta go through at least 99.43 first.
Finally and from a very, very long-term perspective shown in the quarterly chart below, it may prove interesting that the 4-year-and-8-month rally from May’11’s 72.69 low came within a mere half-point of its (103.32) 1.618 progression relationship to Mar’08 – Mar’09’s preceding 70.70 – 89.62 rally. Amidst waning upside momentum on this massive scale and historically bullish sentiment accorded the Index and bearish sentiment accorded the currencies, it is well within the realm of possibility that we are witnessing the birth of a huge peak/reversal event in the USD that could span YEARS ahead. This said, the issue of technical and trading SCALE is a paramount factor in navigating such a bearish prospect versus just a larger-degree correction.
These issues considered, shorter-term traders with tighter risk profiles remain advised to maintain a neutral-to-cautiously-bearish stance with strength above 101.73 negating this call and re-exposing the secular bull. Longer-term players remain advised to maintain a cautious bullish policy with a failure below 99.43 required to move to the sidelines ahead of converting to a new bearish policy. In effect the market has identified 101.73 and 99.43 as the key directional triggers heading forward.
The technical construct and expectations for the Euro are identical but inverted to those detailed above for the Index with Thur’s 1.0589 corrective low considered the new short-term risk parameter for shorter-term traders and a neutral-to-cautiously-bullish stance and either 08-Dec’s 1.0874 intra-day high or 05-Dec’s 1.0764 high close the levels the market needs to recoup to expose a major base/reversal threat against long-term bears. These levels are noted in the 240-min, daily close-only and weekly charts below.