EUR: Attempt small longs at 1.4965; stop below 1.4800

Nicole Elliott from Mizuho Corporate Bank at 10/20/09

Comment: Rallying to a new high for this year at 1.4994 even sooner than we had hoped after closing at this year’s high yesterday. The Euro is only slightly overbought and the 9-day moving average gave it another leg up yesterday. While most elements suggest a break above the psychological 1.5000 level is imminent, caution is warranted because yesterday’s ‘hanging man’ candle shows signs of instability at current levels. Note that consensus opinion at the beginning of this month was that the Euro would weaken against the US dollar.

Strategy: Attempt small longs at 1.4965; stop below 1.4800. Add to longs on a sustained break above 1.5000 for 1.5245 short term.

Comment: Retreating from a recent high at 136.07 around the mid-point of the broad range that has held since late March. Uninspiring at best yet we shall continue watch for signs of forming an interim top – yet again.

Strategy: Attempt shorts at 135.00; stop above 136.25. Short term target 133.00.

Comment: The 26-day moving average provided support for another rally taking Cable up to a thin Ichimoku ‘cloud’ and trendline resistance. Allow for a little hesitation here this morning, maybe all day, prior to a break higher and test of important resistance around 1.6665. We should warn though that Cable is overbought but momentum is bullish for the first time since mid-September.

Strategy: Attempt small longs at 1.6435, adding to 1.6300; stop well below 1.6240. First target 1.6600/1.6665.

Comment: Retreating ahead of first Fibonacci resistance, below the lower edge of a descending Ichimoku ‘cloud’, moving averages still suggest a short position, and re-drawn trendline resistance. Continue to watch for signs of topping this week in what increasingly is looking like potential ‘triangle’ consolidation.

Strategy: Attempt small shorts at 90.15, adding to 90.50; stop well above 91.00. Short term target 90.00, then 89.50/89.25.