EUR: Buy at 1.3625; stop below 1.3400

Nicole Elliott from Mizuho Corporate Bank at 02/22/10

Comment: Last week’s large ‘doji’ candle after the unstable ‘wedge’ formation of the last three weeks suggests an interim low might be in place, with a ‘spike low’ below the weekly Ichimoku ‘cloud’. The Euro is as oversold as it was in November 2008 and bearish momentum is at its strongest since December 2008. Watch for short-covering this week.

Strategy: Buy at 1.3625; stop below 1.3400. Add to longs on a sustained break above 1.3650 for 1.3800.

Comment: Inching up to 125.24, the top of the potential inverted ‘flag’ formation after an A, B, C-type corrective bounce where C equals A. The Euro is not oversold and momentum is not particularly bearish. Still messy so allow for more random moves between 9 and 26-day moving averages.

Strategy: Sell at 124.75; stop above 125.30. First target 123.50, then 121.55.

Comment: Friday’s ‘hammer’ candle hints that Cable might start to make an interim low but it is lagging badly and has to do a lot more than to do than this over the coming week. Watch for much clearer signs of forming a weekly reversal candle, hopefully by the end of this week and this month.

Strategy: Possibly attempt small longs at 1.5460; stop below 1.5300. First target 1.5500, then 1.5700.

Comment: Friday’s small ‘shooting star’ candle against ‘channel’ resistance and the 200-day moving average at 92.25 suggests the rally will at the very least pause here today and probably all week. Rather worryingly moving averages have turned to positive though the US dollar is very overbought and bullish momentum poor. Therefore we shall be looking for this move to peak and turn down again.

Strategy: Attempt shorts at 91.60; stop above 92.35. Short term target 90.50/90.30.