Euro's correlation to the S&P 500 has been lost since a few days ago when the S&P 500 reversed at 1086 but euro went the opposite way, not following to the upside. The correlation to gold remained higher, though - but since both gold and euro face downside pressure nowadays, lower objectives may be reached - such as the 1100 barrier in gold and 1.4450/65 in euro. I will watch the 1.4450/65 support zone closely if we get there, as it may provide a stable bottom - being the 61.8% of 1.4045-1.5145 and also a former resistance until September's break out. Medium term momentum is also losing strength - not enough (yet) to confirm a longer term reversal, while we're still above the last year's ending range around the 1.4 mark. Euro's loss this month is not negligible - down 3.25% so far, erasing most of previous two months' gains - but keep in mind it comes after 5 positive months in a row - nothing spectacular in that, hence my current view that current drop is likely to be corrective only. I'll post updates of my short-term view, depending on market conditions.
The 1.6155-1.6290 region - between the 50% and 61.8% retracement ratios of the 1.5705-1.6875 remains intact, cable still trading into a relatively narrow range - comparing to the ranges before getting trapped below 1.6300, last week. Downside is slightly favored, but 1.6200-1.6230 is intact and could provide a stable reversal point, upside momentum accelerating - favoring a re-test of the range's top at 1.6300/30 where a potential break out would confirm uptrend resumption, opening 1.65-1.66. Last days' price action shows that dips have found some solid bids, but still not enough to regain the upper territory - above November's opening-close line around 1.6420. My current bias is between neutral and slightly bullish and would turn fully positive on a break above 1.6330, or negative if downtrend continues below 1.6155.
Short term sentiment which turned positive on the break above .7200 remains intact despite today's retreat from .7300. As long as .7180-.7200 doesn't break - ongoing development of the bullish structure is likely to continue. Another notable barrier follows .7300 around .7360 - the downward trend line covering recent peaks - as seen in the chart below. Medium term sentiment is bullish, but it lost some strength due to the consolidation within the 500 points range started in October.
Forex Trader Library
Receive over 15 hours (8 CD's) of our best Forex trading education in one package! Containing the newest Advanced Forex CD, this education pack focuses on exactly what you need to know to become a successful Forex Trader.