Daily Outlook: The trend has been extremely strong these past few weeks as panic spreads through the financial markets about debt problems spreading in Europe to the other PIGS countries. It came out Friday late last week too that the French president threatened to withdraw from the single-currency system if Germany didn't help with the Greek bailout. I am very surprised if they indeed said that, as that is just like adding gasoline to a fire with panicked investors.
Personally I think Europe will get its act together eventually and will be OK - the countries have invested too much so far to let it all collapse around them. But markets will likely need some evidence of this before a sustained resurgence in the Euro and risk-appetite can take hold.
Technically the pair keeps gaining momentum to the downside, breaking downward through bearish channel after bearish channel the past few weeks. Currently the pair is resting on 1.2330 (support from October 28, 2008). A break below this level opens up 1.2300 and 1.2350.
To give you an idea of how bearish some analysts are on the pair, I know many sources who are looking for parity (1.0000) by the end of 2010. I will continue to look to establish shorts on the way down.
Trading Idea: Primary trade is a short in the 1.2440 area with confirmation (see candlestick alerts), with short targets at 1.2415, 1.2390, 1.2360 and 1.2335 for 105 pips profit. If no short entry is taken in this area I will look higher just below 1.2500 (strong resistance) for setting a short down to the 1.2390 and 1.2330 area.
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