Is it time to short the EUR/USD?

The EUR/USD pair is fast approaching what could be a trend change of significant proportion. Check out the Monthly EUR/USD Chart. As can be seen, price has almost reached the upper trend line. What doesn’t show on the long-term chart is that I have this as wave “b” up in “E” down. Whether this is “D” finishing or “b” finishing doesn’t make much difference as the outcome is the same – Down.

For a closer look, the 4hr Chart shows what I’m thinking. That’s the pre-entry chart with a few notes. An up to date chart is here, which shows that now may be a great entry point, better than mine, in fact. And this one shows the fib relations of the legs up. Note that I’m projecting the 50% and 61.8% targets as entries. If this shoots to 100% then I’m quite a bit off the mark and that is a distinct possibility. A much safer entry plan would be to enter on a lower line break and use the peak as a stop point.

A change in E/U trend would be tied to a U.S. Dollar trend change and that also appears to be near. USD 4hr chart can be seen here.

Given these relations and a logical nearby stop point, a short entry looks to be a good risk.

Thumb (Click to enlarge):EUR/USD chart
http://www.tafool.com/Charts/eurusd0318114ha.gif

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What to do with the U.S. Dollar Japanese Yen?

Here’s my plan and thoughts for the USD/JPY pair. Lots of notes, so will put them here instead of on the chart.

The break from the triangle was expected for some time but the voracity was totally unexpected. Oft-times when a fast unexpected move occurs price will return to the break point. More so in forex than in equities it seems. I call this phenomenon “return to station”. As in a train returning to the station to pick up the stragglers or late passengers. This is akin to a gap fill and works on the same foundation. ALL ABOARD! After the train returns to the station and all the riders have boarded the train, the price will resume in its break direction, in this case, down. Price on the U/J pair has now returned to the station and has left again. The actual path is unknown to me but the destination is down.

I’ve been talking about 80.80 bottoming point since July(?) of ’10 and mentioned it at least in September ’10 along with enslinforex on the boards at the Dailyfx site, if not earlier. The triangle and break lower was brought up in early February, at least 4weeks ago, so this action is not unexpected. My USD bottoming count back in Oct was wrong in detail but may be right overall in the zone (http://www.tafool.com/Charts/usd1014104h.gif) from this post Elliott Wave Trading Discussion at Dailyfx back in October (charts have notes on them). The point is, I think this is and still believe it to be a bottoming zone. Given that, I have a bias which may end up burning me.

Now to pick the bottom. Confucius says, “He who pick bottom, end up with stinky finger”.

Price action from here out: I expect a return to the lows. A match of the lows (on a bar chart) or lower on a decrease in volume. The zone is 75.5 to 76.3. Watch the volume peter out and a divergence set up on a new or matching low to make the entry.

On the attached chart you can see my count would NEVER work on a bar chart but is fine on a line chart. I like line charts because they “cut the crap” or noise when wild or low liquidity whips occur. Given all of this, I’m looking for another long once the zone is reached.

Thumb (click to enlarge):
USD/JPY chart
http://www.tafool.com/Charts/usdjpy0319114h.gif

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