Daily analysis and trading strategies 1-22-10

Trading strategy: short at 1.4215, stop at 1.4265(1% risk), objective at 1.4175.

Euro's comeback from the 1.4030 bottom is likely to extend further, towards resistance zone around 1.4250, where fresh selling will probably emerge. Short term sentiment remains bearish while below 1.4250-1.4300, so a daily close above the said range is needed to confirm a turn-around. Intra-day sentiment is slightly positive but interim resistance at 1.4150 has to break in order to strengthen the intra-day momentum. The dollar index currently pulls back from the 78.50 region where a potential double top could form, as seen in the chart below. Breaking below 78 should open 77.50 which is the next support to watch, corresponding to the 1.4285 region of EURUSD, but it is a bit too early to look that far. Current exchange rate is 1.4141 @07:20 GMT

Support: 1.4100, 1.4030/50 and 1.4000 Resistance: 1.4200/20, 1.4250 and 1.4285/00 Market sentiment: long term - bullish, medium term - slightly bullish, short term - bearish, intra-day - slightly bullish

EURUSD 4hrs chart 1-22-2010

USD index daily chart 1-22-2010

NZDUSD

Trading strategy: stand aside

Up 0.73% for today, the kiwi dollar recovers some lost ground against the dollar, but remains into the negative territory - also below the 61.8% retracement ratio of the last up leg from .6970 to .7435. If the recovery continues, next upside objective should be .7200/05, where the NZD found a temporary support (50% of mentioned up leg) before resuming downtrend yesterday. On an intra-day basis, the upside is slightly favored as the New Zealand dollar tries to build momentum, but selling into rallies will limit the upside for now. Current exchange rate is .7147 @07:20 GMT

Support: .7100, .7050 and .7000 Resistance: .7150, .7200/05 and .7250 Market sentiment: long term - bullish, medium term - bullish, short term - slightly bearish, intra-day - slightly bullish

NZDUSD daily chart 1-22-2010

Other setups:

GBPUSD

Trading strategy: long at 1.6250 on break of 1.6240 (hourly bar/candle closed above 1.6240), stop at 1.6190 (1% risk), 1st objective at 1.6320, 2nd objective at 1.6370

The 1.6240/50 level provided both a stable support and a resistance over the last weeks and it is currently being tested. Since last pullback into the mid 1.61 region is likely to be corrective, as the 61.8%-50% range provided support, current recovery may continue, breaking above 1.6240. In case it does, next upside objective comes around 1.6350. Current exchange rate is 1.6240 @07:20 GMT

GBPUSD 4hrs chart 1-22-2010

Have a great day!