Market Outlook

EURO The euro may be nearing the end of its corrective bounce – a near 11 cent rally from its recent lows of 1.1876. Euro gains from hereon are likely to be limited by the resistance zone at 1.31-1.3170.
In any case, unless it manages sustain a convincing breach above 1.3326, the bias would still be tilted towards euro moving lower again.
The region between 1.2570 to 1.2250 would be the likely testing zone after this up-move is over.(medium term target)
The long term target (if 1.3326 is not breached) would be 1.1640
STERLING
The outlook for the pound is quite mixed as it hovers about the 200 day EMA.
The currency faces a strong resistance zone between 1.53 and 1.55, failing to breach which could trigger another round of selling towards 1.4750-1.48. USD/INR
The currency pair is seen consolidating in a tight range and since any consolidation is a precursor to a breakout in volatility, the dollar may be head for some volatile swings going forth.

Consistently trading above multiple moving averages suggests that while some correction towards 46.50 support cannot be ruled out, so long as 46.30 is held, the bias would be in favour of a stronger dollar.
A breach above 47.50 would trigger a move towards 48.50-48.80 SENSEX Indian equities look very ripe for a good corrective fall as price action shown in the chart above is about forming a triple top pattern which typically is a bearish alert.
Inability to trade above 18000 is in itself portending a break below the trend-line (in blue) .A convincing breach below 16700 would confirm the negative view and could take the index all the way down to 14000 levels.

Is it time to Buy the most battered currency …??

With sentiment around the European major bleakest since the time the French and Dutch voted a historic “No” to the EU constitution way back in May 2005, it just may be time to buy the euro as the environment seems perfectly ripe for a surprise rally in the currency pair.



The four hourly chart above clearly indicates divergences, suggesting that the euro may be gearing itself for a relief rally.

From an Elliot perspective the wave counts also suggest that a corrective wave may be around the corner .



If the above wave - count is right and the wave (3) is done with, then euro may be gearing itself for a the 4th wave corrective rally, which in turn can be expected to unfold in a 3 wave fashion. The target zone could be anywhere between 1.2775-1.2990.
Post this corrective bounce, euro could fall to a 1.16 to complete the 5 wave sequence Therefore, this rally can be used to sell euros for the short term.