EUR/USD Wave Analysis for August 2 - 2012

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EUR/USD Elliott Wave
Yesterday the EUR/USD pair was trading in a downward move developing final C wave (coloured blue) of the bigger (2) (coloured green). During the Asian and European sessions this major pair was trading in a sideways move between 1.2285 and 1.2335 levels. Therefore, during the New York session the EUR/USD did not manage to hold this level and we could observe a descending movement towards the 1.2215 level. We can consider this move as the end of the corrective wave (2) (coloured green). At the moment we can observe the beginning of the impulsive wave (3) and we are expecting to see the price around 1.2365 level soon. 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 (1.2041-1.2390-1.2215) with Take Profit 1 at 1.2565(100% of wave 1) and Take Profit 2 at 1.2778 (161.8% of wave 1). To reduce the risk we can use Invalidation point at 1.2041 as Stop Loss. Also it is necessary to monitor the EU Spanish 10-y Bond Auction, Minimum Bid Rate, ECB Press Conference and U.S. Unemployment Claims, Factory Orders m/m, Natural Gas Storage data that can change the rate of the pair.
Support and Resistance
(S3) 1.2143 (S2) 1.2188 (S1) 1.2216 (PP) 1.2261 (R1) 1.2306 (R2) 1.2334 (R3) 1.2379
Trading Forecast
Proceeding from Elliott Wave rules today, the trend is expected to begin the upward movement. That is why long positions at level 1.2300 with Stop Loss 1.2040, Take Profit 1 1.2565 and Take Profit 2 at 1.2778 are recommended.