Sive Morten
Special Consultant to the FPA
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Fundamentals
(Reuters) The euro fell further on Friday after news of shooting inside a shopping center in Munich where police said there were multiple deaths and casualties stoked investor jitters and spurred selling in the single currency.
Guys, here is my call to Europeans. The Globe equilibrium is changing. Europe right now stands in focus of turmoil (as battle for Middle East is almost done), It's tried to be frightened by former world governors, that gradually are loosing power. That's why Germans, French, Italians and others - do not visit huge stores, mass public events (as in Nice Bastilia celebration), concerts, different shows, mass public gathering places, try to avoid rush hours in public places, aeroports, say, all places where a lot of people. Speaking on Munich event, this is not an occasion - it has been done in anniversary of Breivik massacre in 2011 of Palestinian supporters that were in labour camp. This also stands in association to Munich Olympic games when Israel sportsmen deligation were killed in 1972. Finally - precisely 70 years ago, 22th of July 1946, europeans were killed in "King David" hotel explode.
You probably know that in Autumn will be a voting in UN on Palestinian subject to stop illegal Israel building process on Eastern shore of Iordan river and return this territory as Eastern Jerusalem to Palestina. Currently Europe and Germany mostly supports this act. So, Munich massive killing is act of intimidation to Europe and Germany in particular. Just consider the date and agreement with former events...
Another puzzle in this picture - Cyprus has cancelled former agreement on Israel gas transit to Turkey by its territory. Gas is on Gollan tops that belongs to Syria, this is just a question of time when this territory will be returned to its original and single owner... As I've said - buttle for Middle East is almost done, global force balance is changing... Now is a Europe time...
Now, let's go furhter with FOREX...
The dollar index rose to a more than four-month high on Friday as positive U.S. data and weak readings from overseas prompted investors to re-evaluate the likelihood of central bank policy divergence between the United States and other developed countries.
The flash Markit survey of purchasing managers, executives who make spending decisions at major firms in the United States, rose to its highest level in a year, surpassing economists' expectations.
While in Britain, the same metric fell by the most in its 20-year history, prompting UK officials to say more easing could be imminent. In the euro zone, the purchasing managers' index showed its lowest reading since January 2015.
"In the United States, fundamentally, economically speaking, indicators have shown consistency and steadiness," said Juan Perez, currency strategist at Tempus Inc in Washington. "And what we’re seeing post-Brexit is that the fundamentals of manufacturing and services in the euro zone and the UK are at peril. That’s why finally you’re seeing this type of reaction."
The dollar .DXY rose 0.5 percent against its currency basket .DXY touching a high of 97.487, its highest since March 10.
The euro fell to its lowest level against the dollar since Britain's surprise vote to exit the European Union. It was last down 0.45 percent to $1.0975.
Sterling was the biggest mover among major currencies. It fell 1.15 percent against the dollar to $1.3080.
Marc Chandler, chief global currency strategist at Brown Brothers Harriman & Co, also pointed out that readings on U.S. inflation, industrial production, retail sales and employment since the Brexit vote have all beaten expectations. He said that was a leading cause for investors to price back in chances of a rate hike by the Federal Reserve.
Fed funds futures rates on Friday show investors see nearly a 50-percent chance the Federal Reserve raises U.S. overnight interest rates by the end of the year, according to CME Group's FedWatch tool. The chances of the central bank raising overnight rates were below 20 percent just weeks ago.
The same conclusion we could make on other relative events. Political risks are growing, investors become more careful:
Shrugging Off Record Highs, Mutual Fund Investors Remain Wary of Equity Funds
by Tom Roseen
Despite the broad indices reaching record highs during the Thomson Reuters Lipper’s fund-flows week ended July 20, 2016, mutual fund investors collectively kept their foot off the pedal, redeeming $7.1 billion from conventional equity funds (ex-exchange-traded funds [ETFs]). Shrugging off the third consecutive week of plus-side returns for equity funds (+0.86% this past week), mutual fund investors appeared to focus on the Bank of England’s decision to leave its monetary policy unchanged, a horrific terrorist attack in Nice, and the failed coup attempt in Turkey, preferring to sit on the sidelines and take a skeptical reading of upbeat economic news out of China and the U.S. For the year-to-date period equity mutual fund investors redeemed a net $82.0 billion from the conventional funds business, while being net purchasers of taxable bond funds (+$16.7 billion) and municipal bond funds (+$32.7 billion).
Perhaps more telling, authorized participants (APs) have continued to pad the coffers of equity ETFs, injecting some $4.3 billion into the group for the flows week. With much of the recent uncertainty put to rest, the “Brexit” vote completed, and the Federal Reserve Board not raising its benchmark interest rate, it appears many APs are finding some buying opportunities and are willing to put on more risk in search of higher yields and returns. Year to date APs have injected a net $18.8 billion into equity ETFs. And much like their retail counterparts, they have taken a keen interest in the fixed income universe, being net purchasers of taxable bond ETFs (+$54.9 billion) and municipal bond ETFs (+$3.4 billion) year to date.
Political Risk
by Amareos
Specifically, our composite measure of political risk is the equal-weighted sum of five sentiment metrics: debt default, financial sector instability, government anger, social inequality and social unrest. This choice reflects the fact that not all political risks, or in extremis crises, are created equal. They can have multiple sources or catalysts. To illustrate this consider a few examples, beginning with the UK Political Risk Indicator (PRI) in the run-up, and subsequent to, the Brexit vote.
At the time PM Cameron announced the date of the EU referendum vote, the UK’s PRI stood at zero – its long-run average – but it rose notably over the following three week period as the public were subjected to the scare tactics of Project Fear, heightening concern about financial instability. While a brief lull was observed after the initial wave of warnings, concerns about financial sector instability quickly resurfaced when official campaigning began in mid-April, rising further in mid-May when the BoE issued its report warning of recession in the event of a No vote.
By the time of the vote the UK PRI had increased to its highest level since the widespread and violent street protests of summer 2011 when social unrest surged. That the index remains at such elevated levels is a clear signal that despite the UK being a stable and open economy – and hence likely to be considered a low political risk on some metrics – the environment contains substantial political risk. Certainly, it will be interesting to monitor how the UK PRI evolves in light of the unexpectedly early victory of Teresa May in the Tory leadership race leading to her replacing Cameron as British prime minister this week.
Finally, and more forward looking, what about the situation in the US in the run-up to November’s presidential election? The US PRI has been fairly low over the last year or two. However, it jumped very sharply over the last few days reflecting rising social unrest and government anger – obviously events in Dallas have had a strong bearing.
Given the vitriol seen already between the two presidential candidates, and Trump’s sometimes less than diplomatic language, we strongly expect the US PRI to rise as we head in to the final months of campaigning. By how much US political risk rises over the election campaign is another question? We will have to see. What ever happens what is clear is that heightened uncertainty arising from increased political risk is both a challenge and an opportunity for investors. And, anything that can give an edge, like being able to monitor political risk in almost real time, is a valuable addition to any investment process.
COT Report
EUR chart shows mostly bearish supportive dynamic. Take a look that since June speculative short position is growing as well as open interest. It means that traders increase and open new short positions. The same has happened last week.
At the same time, EUR rate has not shown yet corresponding reaction on this process, and it seems that major drop still stands ahead:
Technical
Monthly
Monthly chart was mostly untouched by last week events. Currently July candle is still inside one in relation to June high wave. At the same time market slowly but stubborny continues move down...
Reversal candle that we've discussed last time has become even greater and has increased its reversal quality. As we have said previously - EUR right now shows many bearish signs, as mentioned reversal candle, inability to reach YPR1 etc.
Currently EUR stands at rather strong support area. This is lower border of downward channel and all-time 5/8 Fib support. Here EUR has formed Butterfly "buy" and it has reached first 1.27 extension here.
EUR is forming typical reversal candle in May. Price has moved above April top and tends to close below April's lows. It could not get extended continuation, but usually market shows downward continuation within next 1-3 candles. But we're on monthly chart guys...
Sometimes reversal candles lead to collapse, as it was on EUR around 1.40 area. Thrust down has started particularly by reversal candle in March 2014.
EUR was not able to reach YPR1 and returned right back down to YPP, and now even stands slightly below it. This is bearish sign. Following this logic next destination could be YPS1 right around parity and 1.618 butterfly target. This is just another destination point that we have here.
That's being said, appearing of reversal candle brings nothing good to bulls. Currently we can't precisely forecast the consequences of its appearing, but even minor results will bring 1-2 months of downward action inside current 1.04 -1.15 consolidation... Although potential bearish impact could be even stronger.
Finally we have another bearish sign that looks like bearish dynamic pressure. Take a look that although trend holds bullish - market shows inablitity to move up, even from strong support area. Next strong support stands precisely at parity and will become a culmination of downward action, since this level includes support line, YPS1 and butterfly 1.618 target. Brexit results hardly will bring prosperity to EU and probably will become another bearish driving factor for EUR.
That's being said, we treat long-term perspective for EUR as moderately bearish. Any hint on rate hike from the Fed will accelearte dropping here.
Weekly
Here we first recall what we've said last time.
Trend has turned bearish on weekly chart. Current move down could get further continuation. Despite multiple fluctuations in wide range - market keeps valid the shape of butterfly. It is especially interesting that during last upside action EUR has stopped slightly below the top of major butterfly swing. As well as 1.05 low was slightly higher that low of March 2015. This lets EUR to keep chances on this large butterfly that has the same targets around parity as monthly one by the way....
But let's get closer to shorter-term perspective. Careful analysis of the swings shows that EUR keeps almost equal all downward harmonic swings inside this consolidation. Sometimes they are slightly greater, sometimes slightly smaller, but this difference is mild and mostly they are equal. So, we've estimated that that EUR should move slightly lower to major 50% support around 1.1060 area.Now this has happened. EUR is trying now to break the harmonic swing. Usually as soon as harmonic swing is broken - it doubles in direction of breakout, i.e. to the downside.
Here again we mostly support our previous view that EUR will move down further. This stubborn standing around 1.1050-1.11could be explained combination of daily levels and YPP. But on Brexit turmoil EUR has pierced it strongly and right now this level becomes weaker and we have reversal candle on monthly chart.
Take a look carefully at weekly chart - we have drop out from the top. Last time when this has happened EUR has doubled harmonic swing on a way down and reached 1.05 lows. As we have similar situation here - harmonic swing again could be doubled. In this case we again will appear around 1.05 lows.
But this is not the end guys. Right now we see relatively rare candlestick pattern that calls "3 black crows". This is bearish reversal pattern and very often becomes a sign for significant downward action. Thus, in perspective of 1-2 months we really could get downward continuation here, on EUR.
And finally in last 3-4 weeks we clearly see inability of market to turn up again. This behavior amazingly correpsonds to the same action when EUR has dropped down from 1.16 top. After first wave of drop - it also has tried to turn up by some retracement but later failed and dropped to 1.05. Here we see very similar behavior.
If this time we will get the same continuation as last time, i.e. double of harmonic siwng - then, we again should appear around 1.05 area... But second appearing of the price there could become a fatal and EUR easily will follow to butterfly target and parity destination. Currently price still stands inside the Brexit candle range, but gradually moves to its bottom.
Daily
So, on daily chart we see important information. Yesterday market has erased both bullish grabbers that were formed previously and confirmed bearish sentiment. As a result we clearly could recognize existed swings here. as Brexit CD leg has happened (drop was right to 100% target of our AB=CD) - minor retracemen up has followed then. EUR has made an attempt to make it 2-leg retracement, but it had no power to complete this upside AB-CD and we've got butterfly pattern on 4-hour chart.
Now, as upside bounce has been done, we probably stand in extension leg to next target - 1.618 @ 1.06. As EUR is not at oversold, no other significant upside bounces should happen. Also we have some closer targets, such as 1.09 lows due bearish grabber and some other that are based on intraday patterns:
Intraday
So, looks like our careful suggestion on inability of EUR to move higher was correct and market has dropped and mostly erase perspective for "222" Buy pattern. Besides, overall action that EUR shows in last 2 sessions was not typical for reversal and mostly reminds retracement.
At the same time, as you can see - EUR has hit first 1.27 target of small hourly butterfy. It means that some minor retracement still could happen.
Trend is bearish now on all time frames. Upside retracement hardly will be strong. Most probable destination is an area between WPP and K-resistance on hourly chart:
Conclusion:
Support where market stands on monthly chart is very long-term and wide. Standing there could last for months or even years, and may be sometime upward action will happen there. But right now, EUR shows bearish signs for perspective of 1-2 months. It's really high probability exists that move down will continue at least to 1.05 area or even deeper.
In shorter -term perspective EUR has erased bulish patterns and by market mechanics currency stands in extension mode to next target around 1.06 area. On intraday charts we have more shorter-term targets. On Monday some minor retracement is possible in 1.10 area before downward action will continue. That's being said, currently we do not see any signs that break our bearish view on EUR as in long-term as in short-term perspective.
The technical portion of Sive's analysis owes a great deal to Joe DiNapoli's methods, and uses a number of Joe's proprietary indicators. Please note that Sive's analysis is his own view of the market and is not endorsed by Joe DiNapoli or any related companies.
(Reuters) The euro fell further on Friday after news of shooting inside a shopping center in Munich where police said there were multiple deaths and casualties stoked investor jitters and spurred selling in the single currency.
Guys, here is my call to Europeans. The Globe equilibrium is changing. Europe right now stands in focus of turmoil (as battle for Middle East is almost done), It's tried to be frightened by former world governors, that gradually are loosing power. That's why Germans, French, Italians and others - do not visit huge stores, mass public events (as in Nice Bastilia celebration), concerts, different shows, mass public gathering places, try to avoid rush hours in public places, aeroports, say, all places where a lot of people. Speaking on Munich event, this is not an occasion - it has been done in anniversary of Breivik massacre in 2011 of Palestinian supporters that were in labour camp. This also stands in association to Munich Olympic games when Israel sportsmen deligation were killed in 1972. Finally - precisely 70 years ago, 22th of July 1946, europeans were killed in "King David" hotel explode.
You probably know that in Autumn will be a voting in UN on Palestinian subject to stop illegal Israel building process on Eastern shore of Iordan river and return this territory as Eastern Jerusalem to Palestina. Currently Europe and Germany mostly supports this act. So, Munich massive killing is act of intimidation to Europe and Germany in particular. Just consider the date and agreement with former events...
Another puzzle in this picture - Cyprus has cancelled former agreement on Israel gas transit to Turkey by its territory. Gas is on Gollan tops that belongs to Syria, this is just a question of time when this territory will be returned to its original and single owner... As I've said - buttle for Middle East is almost done, global force balance is changing... Now is a Europe time...
Now, let's go furhter with FOREX...
The dollar index rose to a more than four-month high on Friday as positive U.S. data and weak readings from overseas prompted investors to re-evaluate the likelihood of central bank policy divergence between the United States and other developed countries.
The flash Markit survey of purchasing managers, executives who make spending decisions at major firms in the United States, rose to its highest level in a year, surpassing economists' expectations.
While in Britain, the same metric fell by the most in its 20-year history, prompting UK officials to say more easing could be imminent. In the euro zone, the purchasing managers' index showed its lowest reading since January 2015.
"In the United States, fundamentally, economically speaking, indicators have shown consistency and steadiness," said Juan Perez, currency strategist at Tempus Inc in Washington. "And what we’re seeing post-Brexit is that the fundamentals of manufacturing and services in the euro zone and the UK are at peril. That’s why finally you’re seeing this type of reaction."
The dollar .DXY rose 0.5 percent against its currency basket .DXY touching a high of 97.487, its highest since March 10.
The euro fell to its lowest level against the dollar since Britain's surprise vote to exit the European Union. It was last down 0.45 percent to $1.0975.
Sterling was the biggest mover among major currencies. It fell 1.15 percent against the dollar to $1.3080.
Marc Chandler, chief global currency strategist at Brown Brothers Harriman & Co, also pointed out that readings on U.S. inflation, industrial production, retail sales and employment since the Brexit vote have all beaten expectations. He said that was a leading cause for investors to price back in chances of a rate hike by the Federal Reserve.
Fed funds futures rates on Friday show investors see nearly a 50-percent chance the Federal Reserve raises U.S. overnight interest rates by the end of the year, according to CME Group's FedWatch tool. The chances of the central bank raising overnight rates were below 20 percent just weeks ago.
The same conclusion we could make on other relative events. Political risks are growing, investors become more careful:
Shrugging Off Record Highs, Mutual Fund Investors Remain Wary of Equity Funds
by Tom Roseen
Despite the broad indices reaching record highs during the Thomson Reuters Lipper’s fund-flows week ended July 20, 2016, mutual fund investors collectively kept their foot off the pedal, redeeming $7.1 billion from conventional equity funds (ex-exchange-traded funds [ETFs]). Shrugging off the third consecutive week of plus-side returns for equity funds (+0.86% this past week), mutual fund investors appeared to focus on the Bank of England’s decision to leave its monetary policy unchanged, a horrific terrorist attack in Nice, and the failed coup attempt in Turkey, preferring to sit on the sidelines and take a skeptical reading of upbeat economic news out of China and the U.S. For the year-to-date period equity mutual fund investors redeemed a net $82.0 billion from the conventional funds business, while being net purchasers of taxable bond funds (+$16.7 billion) and municipal bond funds (+$32.7 billion).
Perhaps more telling, authorized participants (APs) have continued to pad the coffers of equity ETFs, injecting some $4.3 billion into the group for the flows week. With much of the recent uncertainty put to rest, the “Brexit” vote completed, and the Federal Reserve Board not raising its benchmark interest rate, it appears many APs are finding some buying opportunities and are willing to put on more risk in search of higher yields and returns. Year to date APs have injected a net $18.8 billion into equity ETFs. And much like their retail counterparts, they have taken a keen interest in the fixed income universe, being net purchasers of taxable bond ETFs (+$54.9 billion) and municipal bond ETFs (+$3.4 billion) year to date.
Political Risk
by Amareos
Specifically, our composite measure of political risk is the equal-weighted sum of five sentiment metrics: debt default, financial sector instability, government anger, social inequality and social unrest. This choice reflects the fact that not all political risks, or in extremis crises, are created equal. They can have multiple sources or catalysts. To illustrate this consider a few examples, beginning with the UK Political Risk Indicator (PRI) in the run-up, and subsequent to, the Brexit vote.
At the time PM Cameron announced the date of the EU referendum vote, the UK’s PRI stood at zero – its long-run average – but it rose notably over the following three week period as the public were subjected to the scare tactics of Project Fear, heightening concern about financial instability. While a brief lull was observed after the initial wave of warnings, concerns about financial sector instability quickly resurfaced when official campaigning began in mid-April, rising further in mid-May when the BoE issued its report warning of recession in the event of a No vote.
By the time of the vote the UK PRI had increased to its highest level since the widespread and violent street protests of summer 2011 when social unrest surged. That the index remains at such elevated levels is a clear signal that despite the UK being a stable and open economy – and hence likely to be considered a low political risk on some metrics – the environment contains substantial political risk. Certainly, it will be interesting to monitor how the UK PRI evolves in light of the unexpectedly early victory of Teresa May in the Tory leadership race leading to her replacing Cameron as British prime minister this week.
Finally, and more forward looking, what about the situation in the US in the run-up to November’s presidential election? The US PRI has been fairly low over the last year or two. However, it jumped very sharply over the last few days reflecting rising social unrest and government anger – obviously events in Dallas have had a strong bearing.
Given the vitriol seen already between the two presidential candidates, and Trump’s sometimes less than diplomatic language, we strongly expect the US PRI to rise as we head in to the final months of campaigning. By how much US political risk rises over the election campaign is another question? We will have to see. What ever happens what is clear is that heightened uncertainty arising from increased political risk is both a challenge and an opportunity for investors. And, anything that can give an edge, like being able to monitor political risk in almost real time, is a valuable addition to any investment process.
COT Report
EUR chart shows mostly bearish supportive dynamic. Take a look that since June speculative short position is growing as well as open interest. It means that traders increase and open new short positions. The same has happened last week.
At the same time, EUR rate has not shown yet corresponding reaction on this process, and it seems that major drop still stands ahead:
Technical
Monthly
Monthly chart was mostly untouched by last week events. Currently July candle is still inside one in relation to June high wave. At the same time market slowly but stubborny continues move down...
Reversal candle that we've discussed last time has become even greater and has increased its reversal quality. As we have said previously - EUR right now shows many bearish signs, as mentioned reversal candle, inability to reach YPR1 etc.
Currently EUR stands at rather strong support area. This is lower border of downward channel and all-time 5/8 Fib support. Here EUR has formed Butterfly "buy" and it has reached first 1.27 extension here.
EUR is forming typical reversal candle in May. Price has moved above April top and tends to close below April's lows. It could not get extended continuation, but usually market shows downward continuation within next 1-3 candles. But we're on monthly chart guys...
Sometimes reversal candles lead to collapse, as it was on EUR around 1.40 area. Thrust down has started particularly by reversal candle in March 2014.
EUR was not able to reach YPR1 and returned right back down to YPP, and now even stands slightly below it. This is bearish sign. Following this logic next destination could be YPS1 right around parity and 1.618 butterfly target. This is just another destination point that we have here.
That's being said, appearing of reversal candle brings nothing good to bulls. Currently we can't precisely forecast the consequences of its appearing, but even minor results will bring 1-2 months of downward action inside current 1.04 -1.15 consolidation... Although potential bearish impact could be even stronger.
Finally we have another bearish sign that looks like bearish dynamic pressure. Take a look that although trend holds bullish - market shows inablitity to move up, even from strong support area. Next strong support stands precisely at parity and will become a culmination of downward action, since this level includes support line, YPS1 and butterfly 1.618 target. Brexit results hardly will bring prosperity to EU and probably will become another bearish driving factor for EUR.
That's being said, we treat long-term perspective for EUR as moderately bearish. Any hint on rate hike from the Fed will accelearte dropping here.
Weekly
Here we first recall what we've said last time.
Trend has turned bearish on weekly chart. Current move down could get further continuation. Despite multiple fluctuations in wide range - market keeps valid the shape of butterfly. It is especially interesting that during last upside action EUR has stopped slightly below the top of major butterfly swing. As well as 1.05 low was slightly higher that low of March 2015. This lets EUR to keep chances on this large butterfly that has the same targets around parity as monthly one by the way....
But let's get closer to shorter-term perspective. Careful analysis of the swings shows that EUR keeps almost equal all downward harmonic swings inside this consolidation. Sometimes they are slightly greater, sometimes slightly smaller, but this difference is mild and mostly they are equal. So, we've estimated that that EUR should move slightly lower to major 50% support around 1.1060 area.Now this has happened. EUR is trying now to break the harmonic swing. Usually as soon as harmonic swing is broken - it doubles in direction of breakout, i.e. to the downside.
Here again we mostly support our previous view that EUR will move down further. This stubborn standing around 1.1050-1.11could be explained combination of daily levels and YPP. But on Brexit turmoil EUR has pierced it strongly and right now this level becomes weaker and we have reversal candle on monthly chart.
Take a look carefully at weekly chart - we have drop out from the top. Last time when this has happened EUR has doubled harmonic swing on a way down and reached 1.05 lows. As we have similar situation here - harmonic swing again could be doubled. In this case we again will appear around 1.05 lows.
But this is not the end guys. Right now we see relatively rare candlestick pattern that calls "3 black crows". This is bearish reversal pattern and very often becomes a sign for significant downward action. Thus, in perspective of 1-2 months we really could get downward continuation here, on EUR.
And finally in last 3-4 weeks we clearly see inability of market to turn up again. This behavior amazingly correpsonds to the same action when EUR has dropped down from 1.16 top. After first wave of drop - it also has tried to turn up by some retracement but later failed and dropped to 1.05. Here we see very similar behavior.
If this time we will get the same continuation as last time, i.e. double of harmonic siwng - then, we again should appear around 1.05 area... But second appearing of the price there could become a fatal and EUR easily will follow to butterfly target and parity destination. Currently price still stands inside the Brexit candle range, but gradually moves to its bottom.
Daily
So, on daily chart we see important information. Yesterday market has erased both bullish grabbers that were formed previously and confirmed bearish sentiment. As a result we clearly could recognize existed swings here. as Brexit CD leg has happened (drop was right to 100% target of our AB=CD) - minor retracemen up has followed then. EUR has made an attempt to make it 2-leg retracement, but it had no power to complete this upside AB-CD and we've got butterfly pattern on 4-hour chart.
Now, as upside bounce has been done, we probably stand in extension leg to next target - 1.618 @ 1.06. As EUR is not at oversold, no other significant upside bounces should happen. Also we have some closer targets, such as 1.09 lows due bearish grabber and some other that are based on intraday patterns:
Intraday
So, looks like our careful suggestion on inability of EUR to move higher was correct and market has dropped and mostly erase perspective for "222" Buy pattern. Besides, overall action that EUR shows in last 2 sessions was not typical for reversal and mostly reminds retracement.
At the same time, as you can see - EUR has hit first 1.27 target of small hourly butterfy. It means that some minor retracement still could happen.
Trend is bearish now on all time frames. Upside retracement hardly will be strong. Most probable destination is an area between WPP and K-resistance on hourly chart:
Conclusion:
Support where market stands on monthly chart is very long-term and wide. Standing there could last for months or even years, and may be sometime upward action will happen there. But right now, EUR shows bearish signs for perspective of 1-2 months. It's really high probability exists that move down will continue at least to 1.05 area or even deeper.
In shorter -term perspective EUR has erased bulish patterns and by market mechanics currency stands in extension mode to next target around 1.06 area. On intraday charts we have more shorter-term targets. On Monday some minor retracement is possible in 1.10 area before downward action will continue. That's being said, currently we do not see any signs that break our bearish view on EUR as in long-term as in short-term perspective.
The technical portion of Sive's analysis owes a great deal to Joe DiNapoli's methods, and uses a number of Joe's proprietary indicators. Please note that Sive's analysis is his own view of the market and is not endorsed by Joe DiNapoli or any related companies.