I am looking to buy the pair in anticipation of an upward correction (or the start of a new uptrend). My plan is to buy @ 1.4670 with a stop @ 1.4585. I will trail my stop if the trades goes my way.
The EUR/USD decline sure looks like it could be the start of a new downtrend, but that also may be why it is just part of a Wave4 irregular flat correction. I would be surprised that a downtrend would be announced this obviously to everyone. However, even if it is the start of a downleg for the Euro, I will try to play the bounce. If I am successful, I can trail my stop and earn a profit regardless of the larger trend. Strong support lies at the trendline, and the 38.2% fibo of the rally from 1.2483-->1.6037.
The 4hr chart above lays out the wave count from 1.6037. It looks like Wave-V extended significantly, but I think one more decline is in the cards (to complete 5-waves on all levels) before a decent rally starts. This would form MACD divergence, a very bullish sign.
I am choosing 1.4670 as a target level because of the following support levels:
- 1.4694: 2.618 * Wave-I thru Wave-III
- 1.4690: Weekly M1 pivot point
- 1.4675: 78.6% fibo of 1.4310-->1.6018
- 1.4667: 38.2% fibo of 1.2483-->1.6018 (Wave3 on daily chart)
- 1.4630: Current level for the rising trendline on daily chart
- 1.4593: Monthly S3 pivot point
- 1.4658: average
My stop is just below the S3 pivot point.