Nearly three months of 2010 have come and gone and so far, there haven’t been too many bulls to be seen on the Euro. They must be off in a paddock somewhere, enjoying the spoils of the excellent long trading of 2009!

There has been plenty of negative talk regarding the European currency (EC-Spotv in ProfitSource) and a lot of speculation that the US Dollar will further strengthen, therefore pushing the Euro down. However, I’m not convinced. I’ve been watching early March – around the 12th – for a low on the Euro and it looks like the Euro might be getting set for a run to the upside.

The Euro has been trapped in a sideways pattern for around six weeks despite the negative news that has been lurking around. We would expect negative news to push the market down, so the sideways move is interesting to say the least. If the market is holding sideways during this period, then a reasonable rise is not out of the question should some positive news be released.

Chart 1 below shows the market action on the Euro (EC-Spotv in ProfitSource).

Chart 1

 

click here to enlarge

It’s interesting to note that the sideways action has been taking place between the 50% and 62.5% resistance points on the March 2009 to November 2009 Ranges Resistance Card. Resistance cards are taught in David Bowden’s Number One Trading Plan and should be set up on any market you are following. Once they are setup, they can be quickly viewed each day, so that no major support or resistance level should come as any surprise.

I will be helping students set up all the relevant resistance cards on multiple markets in our next round of Advanced Trader Coaching which is coming up in April.

At the start of the year I was hoping to see the Euro hold above the major 50% milestone shown in Chart 1. It couldn’t hold but it did manage to find support on the 62.5% milestone before reacting back to the 50% level.

At time of this writing (Tuesday evening, March 16) the market has poked its nose above the 50% milestone during intra-day trading and is currently sitting right on this level.

So far, the low for the year has come in on March 2, but this push to the upside really began on March 9 – close enough to the March 12 pressure date I was watching. If the market can break through and make a higher swing bottom above the 50% milestone, we may well see the bulls come out of hibernation and have some fun!

If it can’t hold the 50% level then a breaking of the March low is well and truly on the cards. As always, time will tell!

Having an opinion on the market is vital, but at the end of the day the market will tell you what it is going to do. There’s no point holding on long if the market is clearing indicating it is heading south. As David Bowden said, “Let the market tell its story.”

Be Prepared!

Mathew Barnes 
Optionetics.com.au
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