EURUSD Weekly Summary: Between two wedges

About Setyo Wibowo:

Living in East Java, Indonesia and holding International Relations degree, Setyo Wibowo began his forex trading career by joining Fortune Channel Investment in 2000 as a market analyst, while learning to trade forex independently on his own. Driven by his desire to share his trading experiences and ideas, Setyo joined the FX Instructor team in 2008. Setyo Wibowo is now living in Mojokerto, East Java, Indonesia.

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The EURUSD continued its bullish correction this week, topped at 1.2415 and closed at 1.2373. We are still in bullish correction phase. This time I want to look at the market with a different perspective from a daily chart. As you can see on my daily chart below, the bearish rally which is started from December 2009 (1.5140) happened when price violated the rising wedge formation after bullish run from March 2009 (1.2456). Price bottomed at 1.1876 on June 07 2010 and corrected higher from that point. The interesting thing about this upside correction is that price made another wedge, a falling wedge, which is a bullish reversal pattern. The question is how far this upside momentum will last? The answer is not easy. The Greek debt crisis no longer create bearish sentiment for the Euro for now. Although the problem still far from being solved and could still bring negative sentiment in the future (not to mention Spain potential debt crisis), the bad news from the Euro zone is waning and that’s why we are in upside correction phase now. The Euro zone is still in negative territory in general and may need another bad news to continue the bearish pressure. Whatever the case, technically we are in upside correction phase, testing 1.2645 (23.6 Fibo retracement of 1.5140 – 1.1876) even 1.3120 (38,2% Fibo retracement of 1.5140 – 1.1876) in longer term. On the downside, we need another movement below 1.2000 to cancel this upside reversal scenario targeting 1.1800 and 1.1600 area as the falling wedge bullish reversal scenario fails. Have a great weekend and see you guys next week.