Euro / US Dollar -

I am trying to figure out the elliot wave count on this pattern. The news around this pattern today:

Germany May Pay 35 Billion Euros for Euro Rescue, Die Welt Says

Euro Weakens for Second Day After Merkel's Party Defeated; Dollar Advances 

Euro Extends Slide Against Dollar, Yen as Leaders Divided on Bailout Fund

Time to cover shorts in the euro

EUR/USD

Finally, the euro break the up-trend long term channel. Massive liquidation. 1.25 & 1.233 next supports.

EUR/USD Daily chart:

EUR/USD Monthly chart: channel 

Some projections: I am not trying to predict the future, I am only considering some probables scenarios since the break of the channel. 

More on the euro: following the Greece market?

The Greece market has broken critical supports. The euro is following the same pattern. Technically, we should see new lows in the euro. The up-trending channel is at risk. I am thinking in 1.25 the first target if it breaks 1.3222. In addition, take a look at the relationship between the Euro, the 10 year treasury bond yield, the Greece market and the S & P 500.  The treasury bonds keep their soft down trend while the Greece debt is going down. The fly to quality is absent, the question is: how long?. The S & P is almost reaching  its target at 1,228 points. I am wondering which could be the effect in the markets if a debt crisis begin in Europe.  

ATG daily chart: notice the positive divergence in the MACD. May be we could see a double bottom. 1.790 points is the critical pivot point. 

ATG weekly chart:

Relationships between the different markets: notice how during the second semester of 2009 the negative correlation between the TNX (10-year treasury note index) and the ATG. In addition, the euro has become irrelevant with respect the SPX. It seems that there is no correlation between them.

  

Euro/Usd monthly: important support.

Euro/Usd weekly:

TNX daily chart:

Market Update

Something in which I am thinking constantly is on the 10-year treasury notes yield. The ascent in the yield, is anticipating inflation, or economic rebound? I think that it is anticipating economic rebound. If you look at the gap between yields on the index-linked and conventional bonds, you will see that this narrow gap is not anticipating inflation.
In addition, sector rotation is holding the indexes. The past week it was energy stocks...before, financials. Let's see what happen with the earnings comings this week.

I think a correction is possible (or necessary) from this levels, but the rule have not changed: "buy the deeps" will be alive until the bears stops shorting all the corrections.
The VIX is something to worry for the bulls. It is making new lows, and looks like it is ready for a rebound. We know what happen when the VIX wakes-up in bad mood.

But, on the other hand, the Dow Jones Transports has confirmed the new highs in the rest of the indexes:

The euro looks like it is ready for a rebound. Look at the EURO/USD monthly chart:

FXE daily chart:

Euro-Usd

Yes, the signal it is not clear enough, but may be the next coming days we will understand. This could be more fuel to the market rally, (if it breaks the channel).

EURO-USD weekly chart - Fibo's: 

EURO-USD daily chart - Fibo's: 

Let's see what's happening in the FXE: