EUR/USD Wave Analysis for August 16,2012

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EUR/USD Elliott Wave
Yesterday the EUR/USD pair was trading in a downward move, developing final C wave of the bigger (2) wave (coloured purple). During the early European session we could observe strong descending movement from 1.2343 towards the 1.2263 level. Therefore, during the New York session this major pair did not manage to hold this level and the price pushed higher. Today during the Asian session we could observe continuation of yesterday's bearish mood that brings the EUR/USD pair to the new low at 1.2255 level, and we can consider this move as the end of the corrective (2) wave (coloured purple). In accordance with our wave rules and taking into account that the wave 3 retraces 161.8% of the wave 1, we can define the potential targets with Fibonacci extensions (1.2240-1.2385-1.2255) with Take Profit 1 at 1.2488 (161.8% of wave 1) and Take Profit 2 at 1.2632(261.8% of wave 1). To reduce the risk, we can use invalidation point at 1.2240 as Stop Loss. Also it is necessary to monitor the EU CPI y/y, Core CPI y/y and U.S. Building Permits, Unemployment Claims, Housing Starts, Philly Fed Manufacturing Index data that can change the rate of the pair.
Support and Resistance
(S3) 1.2219 (S2) 1.2249 (S1) 1.2267 (PP) 1.2298 (R1) 1.2328 (R2) 1.2346 (R3) 1.2377
Trading Forecast
Proceeding from Elliott Wave rules today, the trend is expected to begin the upward movement. That is why long positions at level 1.2290 with Stop Loss 1.2240, Take Profit 1 1.2488, and Take Profit 2 1.2632 are recommended.
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