The Forex Pattern Price Time Report - EUR USD - Evening Session

Despite the hard sell-off on Friday, the EUR USD finished higher for the week. This indicates that Euro traders are leaving open the possibility that the Lehman deal will fall through, otherwise this market would have made a new low for the week. Technically, the charts indicate the daily reversal bottom from 1.4629 is still valid. This pair finished the week with a closing price reversal up which indicates more strength next week, but this bottom has to be confirmed by a trade through 1.4908. It seems the direction of the Euro is hinging upon whether the Lehman deal goes through. Be flexible at current levels. Although the main trend is still down, the weekly reversal bottom leaves open the possibility of a resumption of the rally which started on August 20.

Confirming the Weekly Closing Price Reversal is the key to a rally this week.  If this pair break out above 1.4908, then look for it to challenge the month's low at 1.4629.  

The first major up trending Weekly Gann Angle is at 1.4537 this week.  This price has to hold or the break will steepen.

News that a Korean Bank is “considering” an investment in Lehman Brothers helped rally the Dollar on Friday.  The strong up move erased about half of the Dollar’s loss against a few of the majors, except for the British Pound which made a new low for the year on Friday.
 
The move to buy Lehman Brothers and the rally in the Dollar clearly identified the main cause of the Dollar’s recent weakness.  Since July 15 the market seems to have absorbed the problems at Fannie Mae and Freddie Mac as a government bailout has been accepted as the final solution.  Traders, however, did not know how to handle the Lehman situation.  Since the Fed has already indicated that Lehman was not a Bear Stearns, and not a takeover candidate, the break in the Dollar this weak was an indication that the market was gearing up for the worst - a failure at Lehman.

The news regarding a possible buyout of Lehman gave the Dollar a little breathing room, but the failure to close all of the Forex markets lower for the week, left open the possibility of another sell-off next week.  The key to next week’s direction is to watch Lehman Brothers, not Fannie Mae or Freddie Mac. In other news, Bernanke hurt the Dollar’s rise a little when he stated that he expected slower inflation and a more stable currency.  This statement led trader’s to believe that the Fed was in no hurry to raise interest rates.


PATTERN

Main Trend:  Down
Main Trend Top:  1.5768  (07-28-08)
Main Trend Bottom:  1.4629 (08-19-08)

PRICE

1.6038        Main Trend Top (07-15-08)
1.5768        Main Trend Top (07-28-08)
1.5500        .618 Retracement
1.5334        50% Retracement
1.4878        Gann Angle Down

1.4792          New York Close

1.4769        50% Retracement
1.4737        Weekly Gann Angle Up****
1.4736        .618 Retracement****
1.4709        Gann Angle Up
1.4699        50% Retracement
1.4694        Gann Angle Up
1.4669        Gann Angle Up
1.4629        Main Trend Bottom (08-19-08)

TIME

08-27         90-Day Cycle