EUR: Attempt longs at 1.3780

Nicole Elliott from Mizuho Corporate Bank at 02/11/10

Comment: Two consecutive ‘Harami’ patterns (opposite of engulfing two-candle pairs) Friday/Monday and Tuesday/Wednesday underlines the fact that potentially the sell-off in the Euro might be trying to reverse and/or stall. We continue to urge extreme caution and watch for signs of a dramatic reversal, so that we form a big ‘spike low’ probably this week or next. Note that the Euro is no longer oversold and that bearish momentum has halved. Also very good futures volume hint that many are rushing in where others fear to tread.

Strategy: Attempt longs at 1.3780; stop below 1.3640. Short term target 1.3850/1.3900.

Comment: Bouncing from the bottom of ‘channel’ support but still stuck at the 9-day moving average at 123.84. This might turn out to be a small ‘pennant’ suggesting another small corrective leg higher later this week or next week. The Euro is no longer oversold and bearish momentum has eased very considerably. Expect more hesitation in a small range around here this morning while allowing for a short squeeze towards 125.00.

Strategy: Attempt small longs at 123.95, adding to 123.00; stop below 122.00. First target 124.20, maybe 125.00.

Comment: A mess as Cable thrashes around 1.5700, what had been the lower edge of the band that had held since July 2009. Wait and watch for much clearer signs of forming an interim low, maybe next week.

Strategy: Possibly attempt very small longs at 1.5625; stop below 1.5500. Short term target 1.5750/1.5800, then 1.5900.

Comment: Still holding above 50% Fibonacci support and above the bottom edge of a good-sized Ichimoku ‘cloud’, trading in relatively small daily ranges. Expect a cautious upside test of the 9-day moving average at 89.92 and a little bit more, just above 90.00 this morning. Then very late today or tomorrow a test of the flat-bottomed ‘cloud’.

Strategy: Attempt shorts at 89.95; stop above 90.25. Short term target 89.30, then 88.80/88.55.