We came to within three pips of three winners in a row following this morning's weaker-than-expected ISM at 10:00 am. EST. EUR/USD put in a 1.3052 high against our 1.3055 sell limits immediately following the release, and then suddenly reversed course to trade to a 1.3025 low. Since then, it has chopped lower to the 1.3015 area.

A second look at this wave count, with some help from one of the world's best Elliotticians last night, produced further evidence that the current run from 1.2865 is actually a complex B-wave with a 1.3052 terminus following this morning's ISM (and our missed 55 fill). The very extended A-wave that brought us down to the 1.2865 low in 5 waves began almost exactly one month ago on 1/2/07 at 1.3295. As I mentioned, we just saw a complex three waves up in B, which leaves another possible 5-wave move down in wave C to complete a 5-3-5 ABC zig zag. The implications are well below the 1.2865 low, and possibly .618 the distance of wave A at 1.2785.



A closer look at this B wave up shows a structurally weak EUR/USD around the minor uptrend support shown in orange at around 1.3015-20. I'm short a small position here with stops around 1.3035. It's probably not the best idea I've had, because the market is quiet at this time of the day and everyone is on NFP watch for tomorrow morning. But, the patterns appear to be solid and risk justifies the reward. If we catch breakdown here, watch trendline support at 1.2970 as potential support.



Todd Gordon is a Technical Currency Strategist and Fund Trader with GAIN Capital Group.

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The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.