Monday October 4, 2010 - 20:51:39 GMT
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Forex Hound - www.forexhound.com
Euro in Position to Post Daily Reversal Top; Setting up for Correction
The Euro is under pressure at the
mid-session, putting it in a position to form a closing price reversal top and
setting up the market for a near-term correction.
The EUR USD traded higher from the opening
Sunday night, buoyed by friendly comments from Chinese Premier Wen Jiabao who
emphasized support for Greece in a speech and added according to The Wall
Street Journal, â€śChina will not reduce its euro-bond holdings and China
supports a stable euro.â€ť
The single-currency broke from its high and
turned lower after it was reported last night that Nobel Prize-wining economist,
Joseph Stigliz, warned of sovereign debt threats to the stability of the Euro
Region, eroding Jiabaoâ€™s bullish spin, and forcing investors to once again face
the reality of debt problems in Spain, Ireland and other peripheral nations.
This afternoonâ€™s weakness has the
appearance of profit-taking with no sign of a change in trend to down. A solid
closing price reversal top can, however, lead to the start of a near-term
correction which could take some of the overbought pressure off the Euro.
Todayâ€™s break could also be a sign of a
tired market since the topping action is taking place so close to a major
Fibonacci level at 1.3896. Besides a reversal top, a break under a major 50%
level at 1.3510 will also be a sign that selling pressure is building.
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