EUR: Possibly attempt tiny longs at 1.4365; stop below 1.4280

Nicole Elliott from Mizuho Corporate Bank at 12/18/09

Technical Analysis will be away until Monday the 4th of January

Comment: Losing ground against the US dollar (and the Swiss franc), retracing 61% of the previous slow rally. The decline of the last three weeks feels very big in contrast to the grinding earlier rally, but is much smaller than the five consecutive down weeks starting in January this year. Where this correction will end is anyone’s guess in current painfully thin conditions, but we continue to watch (and hope) at Fibonacci levels. Almost record volume in futures contracts suggests desperation.

Strategy: Possibly attempt tiny longs at 1.4365; stop below 1.4280. Short term target 1.4600, then 1.4825.

Comment: Breaking below the inverted ‘pennant’ and re-testing the lower edge of a very broad band that has held for most of this year, as expected. Other yen crosses are lagging suggesting Euro weakness. Allow for more cautious downside testing with huge intra-day moves in very thin conditions.

Strategy: Sell at 128.95, adding to 130.50; stop above 131.00. Add to shorts on a sustained break below 128.75 to cover ahead of 127.00.

Comment: Holding up better than many though struggling under a widening Ichimoku ‘cloud’. Expect Cable to try and base against Fibonacci retracement support again today.

Strategy: Possibly attempt small longs at 1.6150; stop below 1.6080. First target 1.6300 then 1.6400.

Comment: Massive intra-day swings at the apex of the ‘triangle’, just below a thin Ichimoku ‘cloud’. This market, and all yen crosses, are looking for direction and moves could become extreme in very thin conditions over the next two weeks. Prepare for the worst.

Strategy: Attempt shorts at 89.75; stop above 91.00. Short term target 89.00, then 88.50.