Up 100 points from today's earlier trading levels - the euro managed to recover some ground finding interim support into the 1.1900-1.1950 region. Intra-day sentiment is bullish since it breached above yesterday's top around 1.2000, but current recovery is most likely corrective, hence normal in current market conditions - when most intra-day rallies were short-lived. Resistance formed by the downward trend line coming from 1.3360 - connecting recent tops - is being tested and so far it doesn't seem that major selling resumed. Therefore, the pair might be ready for yet another breach higher, above the said trend line, but the question is: will it be sustained or will fade again - resulting in a false break-out? In case of a non-sustained break, next region to look for selling opportunities would be 1.2150 - former support providing a stable bottom on previous 3 weeks. Higher than that comes 1.2430/50 - but if it gets that high, short-term sentiment will show bullish signs - opening 1.3000 as a potential target within the coming weeks. Meanwhile, I maintain my bearish stance on the EUR and I doubt that we'll see a prolonged action to benefit the bulls - if there are any left.
1250 remains under pressure despite yesterday's pull back. Technically - a double top combined with yesterday's pin bar provides a beautiful setup, suggesting that a major correction is underway. If one can ignore the debt crisis, the political and military tensions around the globe, equities bottoming and all other facts that make gold a safe haven - then he might consider this opportunity to join a potential counter-trend move.
An interesting setup can be seen on the long-term charts (monthly chart below) - as a major trend line from 1.4275 (currently around 1.1700) is under pressure and last test of this resistance occurred in late 2008. Looking at the shorter term charts, we can see that support is currently being tested into the 1.1400-1.1450 region and a potential break down would open 1.1200 on first phase, which might be a bearish objective on a short-term basis.
Cable continues to orbit around 1.4500 - which provided both a support and a resistance, but this 3′rd break out this week seems more firm. Therefore, buying dips on a potential pullback to 1.4500 might be a good bet.
And some recommended articles for today:
- Gold, FX, Bonds, Metals, Equities, Cash, PIGS, Apples and the Illuminati.
- 440 Billion Euro Safety Net in Place; Estonia Joins Club Euro; Is Belgium Greece of the North?
- Dances with the Yen
- Setting Up For A Return Of Risk Appetite Temporarily
- (Gold) Still just a baby bull
- Buying and Selling
Have a great evening!