FX Trading - MAY 26th                                            

This medium term analysis forms the basis of my FX forecasting service (also covering JPY, CHF, GBP, AUD and NZD) which provides shorter term trading ideas. It is updated daily and emailed in PDF format to subscribers. A three week trial is available for $50 from TRL@clear.net.nz

EUR/USD has now met my 1.2500 Medium Term Target and the Euro’s Downtrend displays the requisite wave form to enable a completion of the larger 3rd-Wave decline extending from the Wave 2/ peak of early June (refer Daily chart below).

However, before concluding that a significant low is imminent, the “bigger picture” is worthy of scrutiny. Yes, the Euro is over-sold, sentiment is Bearish and there is a belief by many that the “worst has already been discounted”. Nevertheless,           pre-empting bottoms is often a foolish undertaking and it is possible that the Euro has only just completed a multi-year, complex Head and Shoulders Reversal formation (refer Weekly chart below). Resistance around the 1.2630 level must be been over-come to diffuse this Bearish potential.

In terms of the Elliott Wave structure of the market, my best interpretation calls for at least a retest of the June 2010 low of 1.1860 But with the opportunity for a further decline toward the 1.1175 level over coming weeks/months.  So as you can see, we should keep an Open mind as to the fate of the Euro and to continue to give benefit of doubt to the dominant Trend (until this gives us reason to think otherwise).

Disclaimer: Max McKegg & Technical Research Ltd accept no liability  whatsoever for any loss or

damage that may result, directly or indirectly, from any forecast, comment or opinion, information or omission, whether negligent or otherwise, within this report.