EUR/USD Sell Recommendation Issued @1.5035 (Daily Classical)

Published October 15th, 2009 - 11:56 GMT

•    Euro sell issued
•    Dollar/Yen inside day
•    Cable testing range high
•    Dollar/Swiss considers par

– Fresh 2009 highs being made on Thursday with the market ready to test the critical psychological barriers by 1.5000. While there is now the potential for gains to extend beyond 1.5000 towards the 78.6% fib retracement off of the major 2008 high-lows in the 1.5200’s, we like the idea of looking to sell a failure above 1.5000 today in anticipation of a short-term corrective pullback. We look for the market to take out 1.5000 today and run up before eventually stalling out by 1.5040. Our ATR analysis shows a potential high by 1.5040 and as such, we will place a sell order just ahead of this level at 1.5035.  STRATEGY: SELL @1.5035 FOR AN OPEN OBJECTIVE; STOP 1.5135. RECOMMENDATION TO BE REMOVED IF NOT TRIGGERED BY NEW YORK CLOSE (5PM ET) ON THURSDAY. POSITION SIZE SHOULD BE 3X EQUITY.

USD/JPY – As expected, the market has once again rolled over following the recent corrective surge, with the overriding downtrend still very much in force. Look for a lower top by 90.50 to be confirmed on the break below 88.00 over the coming sessions. Below 88.00 then exposes the critical matched trend lows from late 2008 and early 2009 by 87.17. Only back above 90.50 delays. Inside day price action on Thursday leaves makes trading the pair less than compelling. STRATEGY: STAND ASIDE

GBP/USD – In the process of testing some key range highs by 1.6130, with a break of this level to likely accelerate gains back into the 1.6300’s. However, inability to overcome 1.6130 suggests that the market is still content on consolidating and opens the door for a drop back into the familiar range. It is worth noting that Sterling has been beaten down of late on a relative values basis and could be poised to play a game of catch-up. This means that additional broad based USD weakness could open a surge in the pair, while a USD rally will not way as heavily.  STRATEGY: STAND ASIDE FOR NOW

USD/CHF – Wednesday’s bearish price action and break to fresh 2009 lows seriously dampens recovery hopes and now exposes a direct retest of critical psychological support at parity. We would expect to see a test of this level by the end of the week, with only a break back above 1.0230 to take the pressure off of the downside and potentially force a shift in the intensely bearish structure. STAND ASIDE   

Written by Joel Kruger, Technical Currency Strategist for
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