FX.co ★ Forecast and weekly analysis of EUR/USD for April 14-17, 2014

Forecast

Too many people first called the collapse of the dollar and then later the fall of the euro. A few days back, I discussed an extended ending pattern which would not hold ground above 1.4. So here is the big alternate as many currencies continue their rise against the dollar once again and commodities are rising on pessimism. Are we seeing the real dollar collapse? The long-term chart of the euro has an alternate count that I discussed in my previous articles. The monthly chart keeps making higher tops and bottoms indicating that a trend may be developing.

If the euro moves above 1.4, it would trigger a movement to the upper band in the monthly chart for targets at 1.425, 1.44, 1.4550, 1.47, and 1.496 levels. You can check the calculation in the below weekly chart.

In the daily chart, it would possibly count as follows. That the entire 2005-2012 pattern is a running triangle in wave B and now wave C up long term has started (monthly chart). The Elliott wave pattern in the daily chart is shown in the below chart. The daily chart would count as a series of impulses and we have just completed wave 2 of 3. Wave 3/3 should have now started. Above 1.4, this bullish alternate would have to be actively considered on the euro. And with the euro having near 50% weightage on the dollar index, the dollar would continue to fall.

Weekly analysis (April 14-17)

The pair is facing strong resistance at 1.39 levels. As we recommended in the previous articles, sell on rally for the short-term perspective, the same strategy we are following this week as well. Until the pair trades above 1.4 levels, traders can generate some short positions. The first sign of weakness for this week is that the pair is trading below 1.3876 level (March 24 high). In Asia, the pair is trading at 1.3846 levels. On the down side, the pair has strong support at 1.3820, 1.3807, and 1.3780. Once the pair breaks the 1.3780 (50SMA) levels that will trigger panic, it will drift towards 1.3673 (April 4 low), 1.3643 (March 27 low).

On the up side, if the pair trades above the 1.3876 levels, it will fly up to 1.39, 1.34, and 1.396 levels. Please remember the pair is facing selling pressure on 1.39 levels. Fresh up move will take place only above 1.4 levels. The RSI in the H4 chart, favors sell side. I expect the pair will touch 1.374 levels during this week.

For intraday perspective, the pair becomes weak below 1.3826, and strong, above 1.3864 towards 1.3896 and 1.3906 levels. We expect a pullback towards 1.3864 and 1.39 levels.