EURUSD Outlook-Thursday, August 21, 2008

The EURUSD remains in a very strong short term and medium term down trend from the July 15, 2008 high at 1.6037 which is impulsive, whereas, from a broad outlook, the move lower remains corrective. I will explain in detail below, however, the fact is, the sell off from 1.6037 has been dramatic and could be the beginning of a significant move lower in EURUSD in the months ahead.

The short term fall from the August 11, 2008 high at 1.5083 remains active as only a 1 hour open and close above 1.4802 will complete this fall with Monday’s 1.4628 low. A sustained break of 1.4802 suggest prices will continue to move higher with prices likely to remain within a 1.4802-1.4909 consolidation zone before attempting another move to the downside. Only a sustained move above 1.4976 will eliminate any short term downside pressure and suggest prices will continue to move higher with potential for 1.5166 in the days ahead. To the downside, a sustained move below 1.4754 will indicate price are likely to move lower within a 1.4706-1.4754 consolidation zone, as a 1 hr open and close below 1.4676 will confirm prices are once again moving lower with 1.4628 as the next objective.

The medium term fall from the July 15, 2008 high remains active while 1.4628 holds, as only a daily open and close above 1.5166 will complete this fall at 1.4626, with prices then likely to trade within a 1.5166-1.5499 consolidation zone before attempting another move to the downside. Any move up within the current medium term trend is corrective, meaning, such a move will only be a market correction before another push to the downside which will be impulsive. However, ONLY a daily open and close above 1.5704 will eliminate any medium term downside risk and suggest prices are likely to continue higher with 1.5844 as the next objective. But as to the next potential move to the downside, this move will be explosive as supported by high volume and strong momentum, as such a move will initially target 1.4358. Additionally, before such a move can occur, prices should not sustain above 1.5499, and ideally hold within a 1.5333-1.5499 zone before attempting another move to the downside. Should the above described event begin to unfold, we will immediately alert our readers and follow with our trade recommendation.

The broad term trend is up, as the rise from the November 2005 low at 1.1642 remains active, as only weekly open and close below 1.4358 will confirm the rise from 1.1642 is complete at 1.6037, with prices then likely to trade within a 1.3321-1.4358 consolidation zone before attempting another move to the upside. Similarly, as with the medium term trend, there is risk for a much deeper correction in the broad outlook with prices targeting 1.3054 in the months ahead, as a monthly open and close below 1.3054 will suggest prices will continue to move lower within a 1.1210-1.3054 consolidation zone before attempting another push to the upside.

As with our GBPUSD outlook dated August 18, 2008, the medium term trend is most crucial with the EURUSD at this juncture. Risk remains high while prices remain below 1.5499 for a significant and dramatic move lower in EURUSD initially targeting 1.4358 and beyond. As to trading, Forex Signals Plus has been profitable 79 out of the last 83 trading days and 16 out of the last 17 weeks and we will continue to improve our services offered to our valued clients.