Weekly chart

Last week review

Another “Marabuzu” candle in size of 300 pips completed a candle pattern called “Morning star” (reversal pattern- Usually works on low levels), breaking strongly the 1.2910 resistance level and actually putting the Euro on a new starting point in relation to the situation I was two weeks ago, when it looked like its crashing is inevitable. Breaking the 1.3241 price level which is a correction in size of a third of the last downtrend (red broken line) and it is possible to reach the 1.3433 price level (50% correction to the downtrend) at first stage and the two third correction level of the same downtrend on the 1.3625 price level on the second stage. In many cases a sharp move downwards is corrected by a third and continues its movement south. In this case the strength at the beginning of the correction move was so aggressive that it is possible in a high probability that we will see it goes above the third correction, meaning the 1.3241. A brake of the price on one of the mentioned correction levels will indicate the possibility for a correction in size of between a third and two thirds of the move upwards in first stage.

Current review for today

The last trading week signed the stoppage of the sharp ascending move, the price has corrected some of the mentioned trend, and the interesting part is on the last candle created which called “the hanging man”. By the Japanese candle theory this candle shows the stoppage of a trend upwards and the possibility for a reversal of the trend when it comes at the end of an uptrend and under a resistance level. At the current situation we cannot call the previous two green candles a classic uptrend but the appearance of “the hanging man” candle after them and under the 1.3240 resistance level shows a possibility for a change of the trend, another thing that strengthens this assumption is the fact that this level is a 38.2% correction of the last descending move (red broken line). In case this scenario will be realized, it is possible that the 1.2910 will be the first target of the price, by being a support level. The second option is breaching the price at the 1.3240 price level with the target at the 1.3433 price level, which is a 50% correction of the mentioned downtrend.

You can see the chart below:

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