EUR/USD: European open analysis
Courtesy of Chifbaw.com
- Buy the EUR/USD in between 1.2665-1.2650, SL 1.2635, targets 1.2670, 1.2730, 1.2770, possibly 1.2870, 1.3020, 1.317, 1.335.
- Risky: buy the EUR/USD at 1.2715/1.2720, SL 1.2690, target 1.2770.
- 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.
This morning the market is signaling further upside in EUR/USD. The bears seem to have become weak, and a market that can’t go down, starts to go up. Yesterday and on Monday, we formed dojis, suggesting that a possible short term reversal must be considered. The market needs to revisit the middle (~1.2770) or the upper side (~1.2890) of the down trending channel to remember why he became bearish in the first place. It is much more difficult to find long entry points today, and trading today will require taking more risks. If you have long positions from yesterday at 1.2665, you should try to hold them today since 1.2770 is in sight. If the market would move down again to the down trending channel support at 1.2650, we would strongly recommend to buy again, but this is very unlikely today. A possible but rather risky play is to enter long at current levels with SL below 1.270. Our main risk event today is the release of the FOMC minutes. The effect of this release is very difficult to assess, and could easily reverse the EUR bullish sentiment to turn it into USD bullish sentiment.
On a side note, AUD/USD is also bullish this morning and seems to be very akin on retesting the upper range of its weekly wedge. We, therefore recommend scalping the AUD/USD in the area between 1.049 and 1.052, where resistance will be very high with a probable return towards 1.045 (and possibly lower).