* In 2010 the Euro used to correct almost 100% back to the previous low before ending a trend sequence on the next new low.
* The Pandora Box analogy with 1996 synthetic price action calls for a 'ratchet' into 1.2610 the 50% retracement.
* July 2011 (Italian Crisis) provides a precedent for an unsustained break below the consolidation low.
The Euro has duly disappointed the market with a deceptive recovery back into the 1.28-1.3170 range. The issue is whether this is still consolidation or trend.
History is our guide in 3 instances:
First as the strong recovery (10 pips beyond the 38.2%) fades the 1.2880 pivotal resistance then it is typical of 4th wave corrections 2 years ago and the expected 100pip consolidation should still break down beyond the 1.2740 major 38.2% retracement to 1.2610 the 50%.
Secondly 1.2610 is the interim base projected by the Pandora Box analogy with price action all the way back to 1996. So our strategy remains the same.. we have added to shorts today (1.2860) with 1.2920 stops for 1.2740 initially eventually 1.2610 where we will cover and buy.
However any further strength today into 1.2900 would complete a 5 wave trend sequence from the low as the first leg of a much earlier larger recovery (similar to the Italian crisis in 2011) to 1.3020-1.3170.
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