On October 21st I wrote about upcoming targets on the CME Euro Futures daily chart. We’re approaching those targets now:

Click on image to enlarge!

I’ve used red trendlines to show how those targets were derived. We always look for the initial target ratio of 1.272 of the prior swing in the opposite direction. When targets from more than one swing group together tightly, they tend to “pull price” to that zone, and then have the potential to serve as resistance in an uptrend. 1.4266 to 1.4283 is the target zone in this case.

After meeting this area, we’ll have no additional outstanding upside targets price breaks the next bold .786 resistance. This is particularly significant resistance since it also shows up on the weekly chart:

Click on image to enlarge!

The black trendlines show that we’re approaching the .618 retracement of the 2008 high to the current swing low established in June of this year. The red trendlines show that this is clustered together with the .786 retracement of the 2009 high to the same low made earlier this year. On this continuous contract chart using Esignal data, that zone comes in from 1.4417 to 1.4443. A glance back at the daily chart shows the key .786 level at 1.4400 as derived from the current front month’s exact highs and lows. Since we depend on a break of .786 to provide a reasonable assurance that we’ll make the corresponding targets, and this particular .786 level shows a near overlap with an important resistance point from an even larger swing, we can consider this area potentially pivotal. At the very least we’ll need to see daily support hold on any pullback from this point. Since support has held since the June low, a break would indicate that the pattern is indeed shifting. One other factor, note the 50 CCI on the weekly timeframe is approaching the underside of +100. Very often when a key .786 resistance factor is approached at the same time the CCI tests this level, they serve to reinforce each other as resistance!

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