In my last post on the Eurocurrency I said that the market had reached strong support at the 3/4 division point of its historical range and at the 1/2 point of its second bear market box and that a substantial rally was imminent. I'd like to update the situation now and look at an emerging system of boxes for the rally which I am anticipating.
The daily chart above shows that the market has traded sideways for a few days at these support levels so I think it is a buy. Even if I am wrong about this I would then expect the119.90 level, the bottom of the next hourly box for the downtrend from 135.10 (in blue) to halt the drop and then generate a rally to 125 or higher.
But I think that the 121.61 low will hold and that the market is about to rally from here. How far will the next step up in its staircase carry? My best guess is that the next reaction will start from 124.40, the 1/2 point of the second box drawn in red. The red boxes are defined by the initial 186 point rally off of the low of 121.61 and should control the uptrend from that level.
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