It seems that the favorite parlor game among Elliott Wave currency watchers is trying to figure out which wave has extended in the Euro’s dramatic drop and/or the U.S. Dollar’s dramatic rise.  What fun!  Even though the Euro found support at the light violet “skyline” at 1.2258 when it tested the level around 8:00 EDT on Tuesday, the modest bounce did nothing to prop up U.S. equity markets during the day.  These levels produced from subdivisions of long-term Fibonacci projections continue to provide an excellent way to mark the progress of the Euro, or just about anything else we watch.  Since the test on Tuesday morning, there have been two more attempts by the Euro to crack the Skyline and it is beginning to give the appearance of an inverted head and shoulder pattern at that level suggesting that perhaps the level might hold. 

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However, we are contained above by a white “Snowline”.  In order of significance, our levels are:

  • Red “Fireline”
  • Green: “Treeline”
  • White “Snowline”
  • Light violet “Skyline”
  • Dashed teal “mogul”

Stepping back to look at these levels on a 60 minute chart we can see how price is stair-stepping its way between bands created by our projections.  So the real question posed by the support at the Skyline at 1.2258 is whether it is sufficient to help get the Euro back over the Snowline at 1.2334.  Failure there would imply that the skyline will break and we will likely fall back down to 1.2134 in relatively short order.  For now, it looks like the Euro wants to make another attempt to get through the skyline.  It’s what I’ll be watching today.

[Click image to enlarge]

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