EURUSD Weekend summary

Just to clarify, this is not the 'Lines in the Sky' report which is bi-weekly, but a weekend review of where we got to Friday and what I am looking at going forward. A very brief summary of the 'Lines in the Sky' report from the 17th November would be that I was anticipating the end of either a 4th wave down or 'b' wave from the pivot high of 1.3171 and that we would then be going up in a 5th wave or 'c' wave higher, as part of an 'E' wave in the triangle consolidation that we have been in for years. The alternative count was that the rise from 1.2041 was in fact a 2nd wave retracement and the triangle actually ended in October 2011 at 1.4246. This rise of last week certainly seemed to fit the former explanation as described in detail in my 'LITS' reports, but I am not one for becoming too attached to any explanation and I'd rather wait for a retracement downhill before committing further, and I think this next move down will provide us a lot of much needed clarity. We have reached the top perimeter line of the regression channel down from 1.3171, having cleared D7 with relative ease, but we have that long term Gann line of 1.3027 (calc'd off 1.6037 all time high) directly above, the yearly My-Wave still formed to the downside and the quite obvious pattern recognition of the January to March 2012 move to work through - this latter explanation would be consistent with a return to the perimeter regression channel down to the 1.2041 low, covered in the LITS reports. So to be very clear, I am fully onboard the 'we are going higher' train but would have to put the 'lower first' at top of my next options list, with a possibility the expected retracement just keeps on going. Nothing like being decisive huh! If the blue descending channel perimeter was the target, then this move up from 1.2659 would be a 'b' wave in a larger 'abc' correction from 1.3171. I am also looking at the deep trough being built by D7 (see last chart link) that signifies the topping or testing zone for price action going forward and can see no reason why a retest of the 1.2041 could not be on the cards, creating a double bottom and breakout through D8 in May 2013, perhaps even clipping D11 on the way. This makes sense to me as D11 is the next target line after a break of D10, which we 'cut' decisively in September 2011. This is all big picture stuff of course but the 'euphoria' surrounding the possible 1-2,1-3 now in wave 3 count up (accepting I had been calling for the turn as already covered!)may be premature and I for one like the wretching likely in this being a 'b' wave up here and not the 'turn'. I have included both counts on that last chart and would bring attention to the Gann line above and D5, the latter being the possible target after cutting D4. However, we have moved deep into the time zone of that D3 trough without a reaction and now D4's is coming to view too. You have got to link the charts together in a sort of slideshow approach, but that is a lot of troughs or topping zones lining up down to D7. If all of those 'D' lines fail to provide support, each will provide ongoing acceleration zones until D11 as described above. The monthly My-Wave is still turned down, as was the yearly, but under pressure at present. However, note the SMI cluster on the 4hr chart (last one) - it is simple enough to say that momentum indicators fail when the trend is moving strongly, as they are really most of use to determine ends of retracements within trend, but that is still a big enough timeframe (covers up to 12hrs in my cluster) to suggest a reasonable retracement at least is coming, after which I can re-look at the options. So, price managed to tag T6 and get to the top of the price envelope for T4 on Friday and that is where I topped up my shorts. I only need a small retracement to break even on my shorts and I am mindful of the fact that I am looking for bearish explanations to appease my trading decision, however I can not go long here and will have to wait for the SMI's to bottom out to do so. It is quite clear from the combined daily and weekly My-Waves that there is nothing to suggest anything close to a weakening trend at this stage, but what has been is not quite the same as what will be. For that we will have to wait and see!