After mess with Swiss we had another big announcement – this time from european central bank. They announced expanded asset purchase programme, which in practice will probably make euro even weaker. The goal here is to help european economy. You can read more about fundamentals after that decision on many blogs and portals. Lets have a look at charts. I mentioned several times that euro was above very important supports. These supports did not hold and we saw a strong move down on euro. Can we draw potential targets for this move down? We can try to use Fibonacci extensions, monthly eurusd:
As you can see, right now we are right at 127% extension. Some bounce from here is possible. In a long term, if euro will be moving down, we have another two targets: 138.2% (at 1.09) and 168.2% right at 1.02. I think that level 1.02 may be an important one. On the other hand – we can’t trust only technical analysis, because there may be only one new announcement from ECB/other bank and it will turn whings around (just saying you should always be careful). For now though this is how I see it on bigger picture (and hunt for opportunities on lower time frames).
On S&P500 it does not look that bad. There was a correction, but bulls protected support at 2000 level. For now there is no reason to panic – we will see what next week will bring. 2000 level support is a place to watch, if there will be a move up then we look at Fibo extension and pivot points. Weekly S&P500:
Many readers trade on DAX, so from now on I will also write about DAX. If you think about it, the eurozone depends strongly from german economy condition, so we should watch closely what is going on there.
After ECB decision DAX went higher. When you look at charts, move up started few days ago (I think that markets anticipated what the decision will be). You can draw Fibo Extension from few moves on monthly chart, but the minimum which you have to watch are Fibo extensions from last move marked below, monthly DAX:
We are looking at 127.0, 138.2, 161.8 extensions as possible targets of this move.
Try to draw Fibo retracement and extension on weekly and monthly DAX chart based on previous swings – worked very well in the past.
Good luck in next week!