Bonds Still Friendly to the Bulls; Currencies Are Close, but Not Quite There Yet
Bulls are claiming victory in certain of our key tells, but the game isn't quite over yet.
The euro has been a big tailwind for risk assets over the last couple of weeks – will it continue?
The euro / US dollar cross (EURUSD) ran right up to short-term resistance – dual resistance in fact – created by the peak on 11/26 and the 100% Fibonacci price projection line for what appears to me to be an "abc" correction on the 10-minute chart below. Only a close above the 1.30082 to 1.30124 range will negate this rather bearish set-up and open up more upside in the short-term.
Click to enlarge
The daily chart below gives us a bird's eye view of where we are with the EURUSD. Based on what I am seeing here, it looks like the most recent upside in the EURUSD was just a corrective second wave higher. If I am correct on that point, then we should see the EURUSD commence a pretty nasty little third wave move to the downside with a target of 1.24254. There are plenty of hurdles for the bears to clear on this trade, however – the first being support at 1.28128.
Any close in the EURUSD above the 1.30124 level will open up more upside potential – perhaps up to the October intra-day peak at 1.31386.
Click to enlarge
The Aussie dollar / US dollar cross nearing key resistance after clawing its way higher since October.
The AUDUSD is running right into the upper edge of a pennant formation on the daily chart below. There is certainly more resistance above the blue downtrend line – namely the longer-term red downtrend line. However, the cross is clearly having to struggle to get through even the lower blue downtrend line. A failure here (which I would be able to call if the cross closed below 1.04164) will likely lead to a test of the blue uptrend line on the chart in short order.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter