Black Swan Forex: EUR/USD Update

Update: EUR/USD Daily

23 August 2013/5:30 p.m. ET

Issue #503

EUR/USD Daily: The pattern analysis below suggests we may have seen the top at 1.3452, which is represented by wave "B"; but I don't think we want play the short side again until we get some decent confirmation. I believe a close below the 21-day moving average (red line) puts the short side in play. The move from low at 1.2754 to the high at 1.3452 can be considered a five-wave impulse move higher (supported by the fundamentals of stabilization across the Eurozone and a recovering Germany, plus rising relative yield); that is how I have counted this move in the chart below. But, we need to keep in mind that a B-wave, or any degree, can retrace up to 99.9% and still keep the overall pattern analysis in play. I hope that doesn't sound like too much mumbo-jumbo, but it is a rule we have to work with. Any move above 1.3711 suggest there is a major change in the global macro view of the world by traders, and may signal the longer term dollar bear market is back in play (more there will be coming soon as I am working on a special report updating the multi-year bull market view in the buck). I still think reward is skewed to the downside. But for now, waiting for confirmation and using the 21-day moving average as that confirmation. Presently, we still have a degree of divergence on the Relative Strength Index (the green line at the bottom of the chart), i.e. the recent high at 1.3452 has not been met by a new high in the RSI. I will keep you posted.

Please click here to view the EUR/USD chart. [http://www.blackswantrading.com/storage/ccpro-2013/082313%20BSF%20503%20eur%20update.pdf]

Regards,

Jack Crooks

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