EUR/USD: London open analysis
Courtesy of Chifbaw.com and you can find full details on their website.
- Preferred: buy the EUR/USD in between 1.2690 (150-DMA) and 1.2675 (trend line support), SL 1.2645, target 1.27, 1.2750.
- Medium: short/scalp the EUR/USD at 1.2785 on rallies during the first hours of the London session, SL 1.2805, targets 1.2750, 1.2690, 1.2630.
- The EUR/USD will not make new highs (higher than 1.317) until Spain requests a bailout and the OMT is activated.
- The market will have a moderately bearish bias until further clarity emerges on the US Fiscal Cliff issue.
As we were expecting, the market enlarged its down trending channel, although no rate cut was necessary to achieve this. We do believe the current channel will offer solid support in the coming days and provide for a low risk buy opportunity for short term profits. Of course, should there be any news signalling a “let go” of Greece by the Troika (refusal to provide the new loan that is currently being discussed), then the EUR/USD will simply collapse and nothing will provide any support. This is our main risk for the coming weeks in this pair. Technically the EUR/USD has rebounded off the 150DMA on Friday. Today we expect the market to stay within the range defined on Friday (1.2690-1.2790) before further continuation of the downtrend in the coming days. We therefore recommend looking for a long entry on a retest of the bottom of the range / 150DMA at 1.2690 or even better, a test of the trend line support (currently ~1.2675). Another opportunity with a higher risk is to short/scalp rallies toward the upper range during the early phase of the London session. A possible entry is Friday’s high which is also minor trend line resistance from the peaks 1.3020 & 1.2875 that comes around 1.2785.