EUR/USD - Q4 2011 Forex Forecast

The EUR/USD made an all time high July 1, 2008, then it tanked. Ever since that time it has succeed to make a lower low and two lower highs.



Looking at the Monthly Chart it is apparently obvious that price has broken a Trend Line, however, as it broke the Trend Line it also poked through a 55 ema that just happens to be in the zone between the 38.2 and 50.0 Fib of the recent rise. This by no means that price is reversing but such a reaction should be expected. A Pull back to the break point is definitely in order. If price poked the 55 once then bounced, the next time it is more likely to break the 55 and I can see it heading down to the 144 ema. Also, it must be noted that the Stochastics is in the overbought zone and is crossing down into the trade zone. I also want to point out that the Monthly ema's are rolling over and the 5 looks as though it is poised to cross the 13 and 21 ema's.



Moving over to the Weekly chart it is easier to see the Trend Line break I just mentioned. When the Monthly 55 was broken the Weekly 233 was also broken which of course added to the retracement. Price also extended out of the lower Bollinger Band which further added to the retracement. When price retraced back up it was met by a 38.2 fib overlapped with a 5 ema that just crossed below the 55 ema. A reaction back down would be expected under these conditions. Now, on the weekly price is agains the lower Bollinger Band and the 233 ema and the Stochastics is at the bottom of the trade zone. It looks to me as though price may want to head back up to the 1.3900 - 1.4000 region before continuing its drop to the down side.



Moving over to the Daily chart price is in a Reverse Fib and Stochastics is surfacing out from the oversold zone which appears to be temporarily bullish, just enough for price to meet up with the daily 21 ema just a bit above 1.3900 so it would make a lot of sense to me for price to head up to the 21 before it continues downward. Over the long term I continue to be bearish on this pair and expect it to continue to dive to at least the weekly 144 and maybe even down to the 233 which takes us down to the 1.2200 - 1.2300 region.