ECZ11

Yesterday's coordinated action by the central banks to lower dollar-swap rates sent the euro into a bullish spasm. The move was strongly impulsive on the hourly chart, but we'll reserve judgment on the likely longevity of the move until we see how the futures behave near the tentative 'p' midpoint of the pattern shown, 1.3551. An easy move through it would portend more upside to at least 1.3681, its 'D' sibling, but it would also infuse the hourly chart with new bullish energy for a possible push toward 1.40.

Sellers have breached a 1.3242 downside target that I'd originally flagged as a back-up-the-truck number.  The overshoot was 30 ticks, and although you still could have easily caught a profitable bull trade using camouflage, initiating a long position shortly after 9 a.m. EST from 1.3240, the fact that the low had already overshot my downside target by 30 ticks implies unambiguously that the euro has significantly further to fall.  My new target is 1.2933, and it comes from the daily chart, where A=1.4450 on August 29.

An onslaught of selling awaits the euro, according to the hourly chart displayed in the inset. With a 3-cent fall in the offing, we should look aggressively for ways to get short (and to back up the truck to buy 'em if and when the 1.3242 downside target shown in the chart is achieved).  If you call up a 5-minute chart, however, you'll notice, that as yesterday's downtrend matured, this vehicle became increasingly difficult to short, stopping out numerous point 'C' highs before resuming the downtrend. This implies that if you do any camouflage trading, you'll need to follow the rules rigorously. We'll take a closer look at the next impromptu trading session, so stay tuned. ______ UPDATE: We'll put this one on the back burner for now, since the daily ups and downs of the Eurocrisis have turned the euro's promising-looking downtrend into trendless mush.