Tuesday

Daily analysis and trading strategies 12-22-09by Liviu

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EURUSD

Trading strategy: small short at 1.4365, stop at 1.4415 (0.5% risk), 1st objective at 1.4315, 2nd objective at 1.4265

Yesterday’s recovery has been (once again) short-lived and the euro failed to stabilize above 1.4340/50 in order to gain positive momentum and test the notable barrier formed by the downward trend line coming from 1.5140 – seen around the 1.4400 handle yesterday, now lower – around 1.4360. Therefore, potential rallies would bring the said resistance in focus within the 1.4350-1.4370 range later today. Current downward cycle has been influenced also by the losses in gold, which slipped below 1100 – 61.8% retracement of last up leg from 1026 to 1226. My yesterday’s small long at 1.4360 strategy has been part of a too optimistic scenario, hence the expectation to see euro finding support above 1.4350 and test (or even break out above) the mentioned downward trend line around 1.4400 has failed – the result being -50 pips. The fast sell-off confirms the strength of current down trend and more selling is likely to emerge, short-term sentiment remaining negative while the pair trades below the $1.4700 handle. Current exchange rate is 1.4291 @06:25 GMT

Support: 1.4250/70, 1.4200 and 1.4150
Resistance: 1.4350/70, 1.4400, 1.4470/90 and 1.4530
Market sentiment: long term – bullish, medium term – slightly bullish, short term – bearish, intra-day – slightly bearish

NZDUSD

Trading strategy: stand aside

A triple bottom is formed at .7040 due to yesterday’s extended decline and it is currently under pressure – a potential break down would open .6900. The .7040 also coincides with the 61.8% retracement of the upward move from September’s .6683 to October’s .7633 and provided a stable support – but will it hold still? It looks like thin ice since recent recovery attempts have been weak and short-lived – not larger than 50 points. Therefore, bearish sentiment remains strong while below .7200. Current exchange rate is .7040 @06:25 GMT

Support: .7030/40,  .7000/15, .6950 and .6900
Resistance: .7100, .7130/50, .7180/00 and .7220/50
Market sentiment: long term – bullish, medium term – bullish, short term – bearish, intra-day – bearish

Have a good day!