EUR: Attempt longs at 1.5085; stop below 1.4950

Nicole Elliott from Mizuho Corporate Bank at 12/02/09

Comment: Consolidating neatly, looking more comfortable above the psychological 1.5000 area. It is not overbought though trading very close to the all-time high on the ECB’s effective exchange rate. If not this week then this month we favour a break to a new high for this year, accentuated by thin markets.

Strategy: Attempt longs at 1.5085; stop below 1.4950. Short term target 1.5145, then more.

Comment: Bouncing a little more than we had allowed for as once again we fail to decidedly break below the large ‘triangle’ that has dominated so far this year. We still see the rally from Friday’s low at 126.95 as an A, B, C-type correction where C is fractionally greater than0.6% of A. The longer we hold below 132.00, the greater the instability and the higher the implied volatility.

Strategy: Sell at 131.55; stop above 132.00. Short term target 130.00, then 129.00.

Comment: Pushing on up from what appears to be an interim low at 1.6272, helped by Fibonacci retracement and the Ichimoku ‘cloud’. It is not overbought and bullish momentum has increased slightly, as has implied volatility.

Strategy: Attempt longs at 1.6565; stop below 1.6350. First target 1.6700, then 1.6800.

Comment: Consolidating neatly under September/October’s lows and around January’s low at 87.10. All aspects of this chart suggests a short position, the only problem being where to place a stop. We continue to see current levels as a selling opportunity for a re-test of the pivotal 85.00 area later this month.

Strategy: Sell at 87.00; stop above 87.55. Short term target 86.00, then 85.00.