Euro at 100% Extension

Commentary: The break under the 100 day SMA is significant as the EURUSD has traded north of this moving average for all of 2007 (since November 2006 actually). The EURUSD is at the 100% extension of 1.3552-1.3392/1.3552 at 1.3264 right now. As we wrote on Friday (1.3680 Top Confirmed With Break of 1.3364) "If the larger bearish bias is correct, then price should drop close to 1.3086 next week or the week thereafter.

On the other hand, if 1.3264 holds and price rallies back to 1.3392, then the long term bearish outlook is most likely incorrect and we would switch to the alternate count which has an ending diagonal unfolding from 1.2482." In other words we are waiting for a drop to 1.3086 and a pullback in a 4th wave before aligning with the bear trend.

Strategy: None