EUR: Attempt small longs at 1.5025; stop below 1.4900

Nicole Elliott from Mizuho Corporate Bank at 12/01/09

Comment: Little to add as we consolidate around the psychological 1.5000 after rallying strongly Friday. We see this as a potential interim low might be in place and we shall now re-test this year’s high at 1.5145. Record futures volume on Friday adds weight to this view.

Strategy: Attempt small longs at 1.5025; stop below 1.4900. Short term target 1.5145, then more.

Comment: Hovering at the bottom of the large ‘triangle’ that has dominated so far this year. The rally from Friday’s low at 126.95 can be seen as an A, B, C-type correction and a selling opportunity for another drop this month. The longer we hold below 132.00, the greater the instability and the higher the implied volatility.

Strategy: Sell at 130.55; stop above 131.50. Short term target 129.00, then 127.00.

Comment: Nothing to add: an interim low appears to have formed in Cable at 1.6272, helped by Fibonacci retracement and the Ichimoku ‘cloud’. Massive futures volume adds weight to this view. It is not overbought and bullish momentum has increased slightly, as has implied volatility.

Strategy: Attempt small longs at 1.6445; stop below 1.6200. First target 1.6600, then 1.6800.

Comment: The bounce from a low at 84.82 seems to have stalled at the 38% Fibonacci retracement, just above the 9-day moving average. The move can be seen as an A, B, C-type correction where C is 0.61% of A. We see this as a selling opportunity for a re-test of the pivotal 85.00 area this month.

Strategy: Sell at 86.85; stop above 87.55. Short term target 86.00, then 85.00.