CONTINUATION

A week without any significant news has almost passed by and it seems that EUR/USD price action is ripe for major declines again. Though I suspected a stronger rally into the 1,3300 area, the down trend appears to be too strong for this advance to last all too long.

A seven-wave diametric formation appears to be coming to its end until the end of this week. Friday we will also witness March US CPI and University of Michigan Confidence indicators, which should turn out to be good triggers for initial declines. As we have already passed more time than the initial downmove, we have green light for shorts. A critical level to the upside is 1,3160, where the previous high resides, the 38% fibonacci retracement, as well as resistance from the low from mid-March. Since the pattern is in its contracting stage it will be very easy to sell aggressively the rally back into the range with a tight stop. Under this condition, currently calculations indicate a stop at 1,3190. Alternatively, if you want to be more conservative you can wait for a break below old lows on Monday - the last one is currently around 1,3070. As a reminder, prices below 1,2800 should be possible - Let's not miss this trend again.

Update: Price has broken through the contraction-condition, briefly touching 1,3200 but from there dropped 125 pips!