Eurodollar Future – March 2010

Nicole Elliott from Mizuho Corporate Bank at 10/12/09

Comment: Eurodollar futures retreated from record highs and the top of very large ‘wedge’ formations. This move appears to be caused by Euribor futures moving lower (flattening the yield curve further), a process that is likely to continue next week. Therefore we could see a clear-out of new recent longs, as prices alternate between painfully slow rallies and sudden slides. Expect a drop to trendline support and possibly the Ichimoku ‘cloud’, at which point a new interim low should form.

Strategy: Possibly attempt the tiniest of shorts at 99.385; stop above 99.500. Target 99.275/99.230. Then watch for signs of basing before going long again using a stop below 99.090.