EUR/USD Wave Analysis for August 9,2012

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EUR/USD Elliott Wave
Since our last analysis, the EUR/USD pair was trading in a downward move developing corrective wave A (coloured purple) of the bigger 2 wave (coloured blue). Yesterday during the Asian and European sessions we could observe a descending movement from 1.2400 towards the 1.2325 level and we can consider this move as the end of the A wave. Therefore, during yesterday's New York session and today ‘s Asian session this major pair did not manage to hold this level and the price started pushing higher when the development of the B wave (coloured purple) started. At the moment the EUR/USD pair is trading around 1.2345 level and we are expecting to see the price around 1.2260 level today. In accordance with our wave rules and taking into account that the wave C retraces 100% of the wave A, we can define the potential targets with Fibonacci extensions (1.2441-1.2326-1.2385) with Take Profit at 1.2261 (100% of wave A). To reduce the risk, we can use resistance at 1.2400 as Stop Loss. Also it is necessary to monitor the EU ECB Monthly Bulletin, Italian Trade Balance and U.S. Trade Balance, Unemployment Claims data that can change the rate of the pair.
Support and Resistance
(S3) 1.2288 (S2) 1.2317 (S1) 1.2335 (PP) 1.2364 (R1) 1.2393 (R2) 1.2411 (R3) 1.2440
Trading Forecast
Proceeding from Elliott Wave rules today, the trend is expected to begin the downward movement. That is why short positions at level 1.2340 with Stop Loss 1.2400 and Take Profit 1.2261 are recommended.
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