Guest Commentary: EUR/USD: The More Bullish it Looks, The More Bearish it Actually Is!

DailyFX

* The Euro continues to map out a very bearish medium term outlook following the 1997 Pandora's Box analogy. We therefore remain medium term short from 1.3180.

* The decline from 1.3200 is very similar to that from 1.3710 which suggests that breaks to new lows will probably not be sustained without an overlapping pullback.

* This downward ratchet should give the impression its correctivebut it will probably only end once the bulls have turned bearish.

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We remain bearish the Euro as it maintains the window for the Pandora's Box 1997 style collapse. In fact the price action since the 1.3200 47% potentially corrective retracement is shaping very similar to the hesitant but persistent decline from the 1.3710 high. A decline that tried its hardest to stop you being short.

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Indeed following the constructive decline to 1.3000 the Euro likely completed an irregular correction at 1.3095 yesterday beyond the C=A either wave 2 in downtrend or B within a more likely prolonged corrective consolidation. Either way, we remain short for a break down through 1.2955 in a bid to accelerate the decline. But if it follows the drop from 1.33710.. more likely within a downward ratchet that will see the market fight the decline initially at 1.2925 the 61.8% retracement later 1.2895 the new C=A but eventually probably stopping at the ideal 1.2775 c=1.618a B wave.

Until then rallies should stay below 1.3095 our short term stops or risk an early run at 1.3200 and possibly spiking to 1.3345 in a larger correction.

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