EUR/USD Wave Analysis for August 15,2012

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EUR/USD Elliott Wave
Since our last analysis, the EUR/USD pair was trading in a downward move, developing corrective wave (2) (coloured purple) of the bigger 3 (coloured blue). During the Asian and early European sessions we could observe a strong ascending movement towards the 1.2385 level and we can consider this move as the end of the (1) wave (coloured purple). Therefore, during the second half of the EU session the EUR/USD did not manage to hold this level and the price slipped towards the 1.2316 level. At the moment we can observe the price trading in a sideways move and we are expecting to see it higher today. In accordance with our wave rules and taking into account that the wave 3 retraces 161.8% of the wave 1, we can define the potential targets with Fibonacci extensions (1.2240-1.2385-1.2316) with Take Profit 1 at 1.2460 (100% of wave 1) and Take Profit 2 at 1.2550 (161.8% of wave 1). To reduce the risk, we can use invalidation point at 1.2240 as Stop Loss. Also it is necessary to monitor the U.S. Core CPI m/m, CPI m/m, Empire State Manufacturing Index, TIC Long-Term Purchases, Capacity Utilization Rate, Industrial Production m/m and Crude Oil Inventories data that can change the rate of the pair.
Support and Resistance
(S3) 1.2272 (S2) 1.2298 (S1) 1.2315 (PP) 1.2341 (R1) 1.2367 (R2) 1.2384 (R3) 1.2410
Trading Forecast
Proceeding from Elliott Wave rules today, the trend is expected to begin the upward movement. That is why long positions at level 1.2345 with Stop Loss 1.2240, Take Profit 1 1.2460, and Take Profit 2 1.2550 are recommended.
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