Trading strategy: standing aside
The euro recovered from the 1.2150 region yesterday, as a result of SNB intervention in EURCHF, which soared 300 points. The rally was capped at 1.2430, where the former support trend line coming from 1.2233 provides intra-day resistance along with Tuesday's top. Support starts at 1.2290/00, backed by 1.2250 and 1.2150. Current recovery may continue as the euro still has ample room to go up, being helped by short covering and CB interventions, as seen yesterday. Next upside barrier to look at, if the ongoing recovery extends further, comes at 1.2620 - 50% of 1.3095-1.2145. Short-term sentiment remains bearish while the pair holds below 1.28-1.29. Current exchange rate is 1.2339 @06:23 GMT
Support: 1.2290/00, 1.2250, 1.2200 and 1.2145/50 Resistance: 1.2430/50, 1.2500 and 1.2620 Market sentiment: long term - bearish, medium term - bearish, short term - bearish, intra-day - slightly bearish
Yesterday's break out above the downward channel formed on the daily charts resulted in a huge squeeze - the euro recovering 800 points so far, also breaking above last month's top side. The large move provides a warning that massive short covering may be contagious and spread across the board, resulting in large swings in other pairs, too. The ongoing weakness of AUD along with the SNB intervention fueled the reversal move which doesn't look exhausted yet.
- XAUUSD daily chart 5-20-2010
Have a good day!