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Currency Technical Report

Mon, Oct 27 2008, 12:53 GMT
by George Antonakos

FXGreece

Resistance: 1,2560-70/ 1,2630/ 1,2695/ 1,2740-50/ 1,2800/ 1,2830
Support : 1,2520/ 1,2470-80/ 1,2445/ 1,2400/ 1,2350-60/ 1,2300/ 1,2270

Comment : Complete panic in the markets on Friday, could be a sign that a bottom formation is close. All signs on Friday, starting from the media transferring panic to the simple people who have nothing to do with investments, to long term support levels that have been reached, could indicate that the end of the fall or the beginning of a strong reaction might be close.
But the truth is, that whenever we tried that scenario we failed, along with those who tried to find a bottom during the sharp fall…

We are facing historical market conditions and they will be a reference and research objective for the future economists.
Nothing that worked in the past is accurate now, and we should watch the market closely following the trend until the market gives signs of reversal. Friday’s panic is certainly one sign but we should wait for more, such as the interest rate decision from the US this week which would be a reason for dollar’s liquidation.

We will wait for clear reversal signs in the daily or the weekly chart and the break of important technical resistance levels before we abandon the downward scenario.

Regarding EUR/USD technical outlook, after Friday’s lows next important support emerges at 1,2470-2530 area, according to the weekly chart. Bulls appeared at those levels, but they couldn’t lead euro much higher from the previous base of 1,2700-30, indicating a corrective move.

This week starts with euro close to Fridays’ lows, forming a sideways consolidation in the short term charts. A clear break of 1,2470-90 indicates the market condition is similar to previous’ week and next targets are found at 1,2270-2330, with interim support at 1,2400. If 1,2470-2530 area is also breached, all scenario will be open, even support levels at 1,1850-00 or 1,2000 could be possible targets.
Important resistance is found at 1,2730-60 and 1,2800-20, while a reversal sign would be euro’s close above 1,3030 area…

STRATEGY
Buy: We keep our positions small and be very cautious for high risk buy orders at 1,2500-20 with stops below 1,2440 and target at 1,2615-30 or 1,2700-30. Buy positions could be tried at a possible false break of 1,2500 (move to very low levels followed by a sharp retracement with daily close above them). Alternatively, we could try buy orders at 1,2280-2320, with stops below 1,2250…

Sell : Only when you follow the trend you can be profitable, and so does our bearish strategy… Today, sell orders could be tried after a break of 1,2470 with target at 1,2400 or 1,2280-2320, which is a more possible target.
We could also try sell orders at 1,2730-60, adding more at 1,2810-30 with stops above 1,2860.

Published on  Mon, Oct 27 2008, 12:55 GMT