EURUSD complex correction just won't end easily. Whenever the pair resumes its downtrend towards the fair value, they come right back to hold it above 1.23.
ECB, EMU, EFSF funding effort in order to subdue the banking crisis in Spain and Greek, caused another round of buying from Commercial and Syndicate buyers in EURUSD and correlated pairs. We have seen increased buy volume since last Friday, however, beginning this week, volume is in decline on the buy side. The sentiment is similar in CME, CBOE volume Put/Call ratio; while long volume still remain strong--this is also indicative in Volume Accumulation on the chart.
Under this scenario, we have a new setup for a strong short on EURUSD, given the pair's bullish sentiment to continue until the ECB rate decision. We have a bearish double zigzag WXY-WXZ correction that is most likely to end 1.29 price area right under the bullish divergence line. Unless there is a breakout above the divergence line, we will be approaching this short as long as the price and wave symmetry stay in line.
EURUSD bullish sentiment should continue until ECB, as it also supported by 200 Day SMA at the 1.2550 price level. This sentiment also represented in our FXE:SPX divergence chart.
Here, $SPX shows strong uptrend while FXE is yet to retrace further up. Another divergence between FXE:SPX should take EURUSD higher before the beginning of the new downtrend.
In the mean time, we will be holding the long from 1.2550 price level with tight stop right below the 200 Day SMA. Profit should be taken on each resistance level until the pair reach to the divergence line; and that's where the 'Kiss Goodbye' trade is expected to trigger.
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