Week of October 21, 2008

EURUSD reached 1.3054 during today’s late US session as this was our forecast sited in the August 21, 2008-8:00 GMT update. On August 21, 2008  we wrote  ” 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. 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.”

At the time we wrote the above outlook the market sentiment was very bearish US dollar with many well respected analyst at the time still targeting a 1.7 and higher for EURUSD in the weeks to follow.  However, our interpretation of pattern recognition, closing prices, trend dynamics and current market sentiment strongly suggested that prices were about to move lower in what would be an “explosive” and “dramatic” move to the downside. And as history has now proven, our mid August outlook and forecast was spot on correct. Risk firmly remains to the downside as any moves to the upside will be corrective and provide opportunity to establish new short postions for potential fall to 1.1210 in the weeks ahead.

More updates later. RW