Spot Euro, Eurostoxx, FTSE 100, Spot USDJPY, Dax, E-Mini S&P

Forecast for 22nd February 2013

Spot Euro

EURUSD broke the 7 month uptrend line support at 1.3245 for a test of 1.3187/83 Fibonacci support & bounced just below at 1.3161. Today we expect a recovery with targets of 1.3246 & then 1.3295/1.3310. This is tough resistance & may cap the bounce. However if we see further strength look for 1.3370/80 which we see as a very good selling opportunity with a stop above 1.3440.

Support at 1.3180/60. Again a chance of a bounce but a break lower would then target the 100 day & 21 week moving average at 1.3120. failure here should find good support at 1.3060/40.

Eurostoxx March contract

EuroStoxx dived to the 2587/80 band & our buying opportunity using stops below 2565. We bottomed at 2474 & look for a move higher today. Targets are 2596 & above here 2611/16. We could stall here & this may be the high for the day but if we push on through 2623 look for 2634, possibly 2643. This is likely to cap the move higher & we are developing a down trend so next week could see some heavy losses. The bounce over the next 2 days should be used a medium term selling opportunity therefore.

2587/80 is good support again today but stops on longs needed below 2570 for 2549 then 2536/32 below.

FTSE 100 March contract

FTSE took a tumble to 6259 as we look for a bounce today. We are sitting just below 6311 resistance but should push higher to test 6344. Above here we should stretch to 6365 & may even revisit 6390/97 over the next 2 sessions. However there is a potential medium term top in place now & we are not expected to break any higher. This bounce can be used to sell in to medium term shorts with a sell off next week looking like a risk.

Support today is at 6285 & then 6259 below. We could bottom here again today but a break then targets 6221/18 which should hold the lows at this stage.

Spot USDJPY

USDJPY is breaking 93.00/90 for a test of 21 day moving average at 92.57 but if this does not hold look for a retest Feb lows at 92.17/91.98. This is good support & we should start to look over sold in the short term at this stage so watch for a bounce. However be ready to go with a break of 91.79 for 91.26 as the next target & support.

The outlook remains weak & so resistance at 93.46 could hold any bounce but above here we may stretch as far as 93.90/94.10.

Dax March contract

Dax tested last week’s low at 7570 & bounced from 7560. We tested the 8 month uptrend & although pierced we held above by the close. We now expect a move higher today to 7612 & then on to 7646. We could even make it as far as 7666/72. However here we are looking for a high to the rally. The longer term charts are starting to turn worryingly negative & we can use this rally over the next 1-2 days to enter medium term shorts as we look for a break of the uptrend next week & possible a heavy sell off in March.

Support at 7570/60 today. If this area does not hold today we could see 7536/30 next & a low possible. However a break signals we are ready for the next big leg lower with 7507 & 7487 as initial targets.

E-Mini S&P March contract

S&P tested good Fibonacci support at 1495 where we predicted a bounce & indeed this was the exact low. The bounce has taken us above 1503 which should act as support now as we target 1508. We do see 1512 possible today or Monday & possibly even 1516. However as stated yesterday we think the market has now topped out after a 3 & a half year rally & this bounce could be the last chance to exit longs before a heavy sell off starting next week & lasting through until Easter.

Below 1503 risks a retest of 1497/95 support where we can try longs again with a stop below 1490 for 1483/81 & eventually 1475/73.

In the longer term we have a frightening head & shoulders pattern built over a 13 year period and this has horrific implications in the years to come. I really hope I am wrong about this but we will need a break above 1580 to calm my fears & this looks very unlikely now.