EUR: Attempt tiny longs at 1.3715

Nicole Elliott from Mizuho Corporate Bank at 02/09/10

Comment: Everyone’s current ‘pet hate’ and though bearish momentum is still terribly strong it does smack of a very crowded trade with almost record futures volume. Be careful and watch for signs of a dramatic reversal, so that we form a big ‘spike low’ probably this week.

Strategy: Attempt tiny longs at 1.3715; stop below 1.3600. Short term target 1.3750, then 1.3850.

Comment: Hovering at the bottom of ‘channel’ support. This pair is still very oversold and bearish momentum has eased slightly. Expect more hesitation above 121.50 today and potentially a short squeeze towards 125.00.

Strategy: Possibly attempt the tiniest of shorts at 123.00; stop above 123.55. First target 121.55, maybe Friday’s low at 120.70.

Comment: Trading under the 38% Fibonacci retracement and the lowest price since May last year. Nothing yet but we continue to wait and watch for signs of forming a sort of ‘spike low’. Nerves of steel and patience needed, something futures traders obviously don’t have as almost record volume and soaring open interest suggest many are rushing in.

Strategy: Possibly attempt tiny longs at 1.5635; stop well below 1.5500. Short term target 1.5750/1.5800.

Comment: Little to add as we hesitate between 61% and 50% Fibonacci support and above the bottom edge of a good-sized Ichimoku ‘cloud’. Expect more of the same this morning, maybe all day, with rallies hopefully capped by the 9-day moving average at 89.92. Note that yesterday’s extraordinarily tiny range and ‘doji’ candle is not a healthy sign. Rather it indicates great instability at current levels. We continue to favour an eventual break lower.

Strategy: Attempt small shorts at 89.55; stop well above 90.00. Short term target 89.20, then 88.80/88.55.