EUR: Attempt small longs at 1.3585

Nicole Elliott from Mizuho Corporate Bank at 02/18/10

Comment: Reversing all of the previous day’s gains but not dipping to a new recent low. Expect it to try and base this morning and claw its way higher late today or tomorrow. We continue to urge extreme caution and watch for signs of a dramatic reversal, so that we form a big ‘spike low’ on (hopefully) this week’s candle.

Strategy: Attempt small longs at 1.3585; stop below 1.3500. Short term target 1.3800/1.3850.

Comment: Suddenly dropping from a high at 124.85 yesterday so that the corrective bounce saw C equal to A. Yesterday’s ‘doji’ denotes instability at current levels and the potential inverted ‘flag’ formation hints at a possible big slide lower starting either today or next week. The Euro is not oversold and momentum is still just bearish.

Strategy: Sell at 123.60, adding to 124.25; stop above 125.00. First target 122.50, then new recent lows.

Comment: Dropping below the 9-day moving average in a potential inverted ‘flag’ formation. Wait and watch for much clearer signs of forming a weekly reversal candle, hopefully by this Friday (or if not by the end of this month).

Strategy: Possibly attempt small longs at 1.5635; stop below 1.5500. Short term target 1.5800, then 1.5900.

Comment: Bursting higher with a decent daily trading range after so many days of tiny moves comes as a surprise. The Ichimoku ‘cloud’ has capped the move but moving averages might cross to bullish. We shall be looking for this move to peak and turn down again. The US dollar is overbought and bullish momentum is low.

Strategy: Attempt shorts at 90.95; stop above 91.75. Short term target 90.40, then 89.35/89.00.