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Guest Commentary: EUR/USD Switching from High Probability to High Return/Risk
* The current rally from 1.2880 is therefore likely to overshoot obvious upside targets to 1.3070 historical confluence.
* This will provide an opportunity not just to square a high probability +170 pip long but also enter a lower probability but better risk return short for 1.2835.
The Euro has maintained the rally and the high probability long where both the bullish and bearish views coincide to the 1.3000-30 target area. And now?
The rally to 1.3125 remains a five wave rally and the decline remains a five wave down both promising further legs in the same direction and suggests the current rally is still a correction within a correction. However if our view that 1.2825 will hold until 1.3170 is broken in line with the Pandora's box analogy of 1996, then the rally should exceed 1.3070 (a backwards target) for a C=A of 245 pips. It so happens that 1.3070-80 is also the 78.6% retracements that Euro managed last October and March in similar circumstances. It is also a possibly unusual c=2.618a and alikely v=i objective to complete the rally from the 1.2880 retest.
Although we have cut longs at 1.30 the 61.8% we will square this next rally and sell against 1.3125 for a loss of 1.2950 now (overlap) to encourage the 1.2825-35 hopefully c=a and 61.8% retracement.
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