The Euro was sold heavily this morning on news out of Lithuania and concern the Greece problem was spreading. This will have very little to do with my trading as I don't trade news but the move created will certainly create some set ups for my in the near future. It’s no accident that the EURUSD begins to settle in the 1.3737 area. Take a look at the significance of this area in that past year. Only 11 months ago we were in this same region with many folks calling for the EURUSD overdone to the top side, yet it continued to rise. The 2009 high took almost six months to be reached once the 1.3737 area was broken. That move has been erased in less than 1/3 that time. The high came before the holiday season in early December 2009.

At these extended levels I'll start looking for pullbacks to take the pair 1.4000 area. There may yet be some more ground to be covered before this happens though. The 100% Fib extension of the 12/03/09 high to the 12/22/09 low, resides in the 1.3652 area, 100 points or so from current prices (as of the time this article was being written).

The last major EURUSD sell off came in three parts. The first reached a low of 1.3880 before retracing the near the 38% line. This was followed by a 100%+ extension of the original move. If the same pattern holds true, we should see the 1.3650 area in the next few days. Then a Retracement then to the 1.4050 area with another leg down to the 1.3100 area could unfold. If there is a resting point between current price action and 1.3100 it should be in the 1.4050/3700 region before falling. Today's S3 is providing support right now. I'll repeat it again; there is a less than 3% occurrence of price closing below a daily S3. If there was a day that looked like it could, today is one of them. I'll trade from a break of 1.3850 to the 1.3925/50 area and then look for more short trades. Tomorrow's price action will have a lot to say about whether today was complete panic or measured skepticism.

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