EUR: Possibly attempt small longs at 1.4920; stop below 1.4800
Nicole Elliott from Mizuho Corporate Bank at 10/18/09
Comment: Even half-baked stockbrokers are becoming aware of the US dollar’s weakness, and the Treasury’s Geithner links the currency’s strength to times of fear and crisis. The Euro is slightly overbought so perhaps its time to take a breather today. A weekly close above 1.4800 would confirm that the next leg of the rally has started.
Strategy: Possibly attempt small longs at 1.4920; stop below 1.4800. Add to longs on a break above 1.4975 for 1.5000/1.5085 short term and then 1.5245.
Comment: Not going according to plan as we break above the mid-point of the broad range that has held since late March. Nevertheless we shall watch for signs of forming an interim top – yet again.
Strategy: Do nothing if you can, but if you can’t possibly attempt tiny shorts at 135.70; stop above 136.25. Short term target 133.00.
Comment: Quickly gathering bullish momentum as we rally from first medium term Fibonacci retracement support (38%), through moving averages and what had bee a sort of ‘neckline’ of an irregular ‘head-and-shoulders’. Very good volume in the futures contract suggest Americans are buying sterling as it is the only currency they can cheaply diversify into. Allow for a little hesitation under today’s Ichimoku ‘cloud’ and watch for a weekly close above 1.6575 to set off another round of short-covering.
Strategy: Possibly attempt small longs at 1.6310; stop well below 1.6100. First target 1.6400.
Comment: Breaking above the recent high, setting off a series of buy stops taking the US dollar over trendline resistance and the moving averages. Undoubtedly a corrective move, but it suggests we will hold above 88.00 for the rest of this month. We still feel we shall form an interim high somewhere below first Fibonacci retracement at 91.75.
Strategy: Possibly attempt small shorts at 90.90; stop above 91.85. Short term target 89.50.