Forex Market Update – Foreign Exchange Analytics

Eur/$ is ranging 1.4315/1.4965 since Nov (see daily chart below) and is seen as a correction, with an eventual upside resolution favored. Currently, the market is down from the recent 1.4925 high, with some potential that this multi-month period of correcting is complete, and targeting a resumption of the gains back to the Nov high at 1.4965 and above ahead.

Eur/$ is ranging 1.4315/1.4965 since Nov (see daily chart below) and is seen as a correction, with an eventual upside resolution favored. Currently, the market is down from the recent 1.4925 high, with some potential that this multi-month period of correcting is complete, and targeting a resumption of the gains back to the Nov high at 1.4965 and above ahead. Reached the buy target from the Jan 11th email at 1.4630 and for now, would stop on a close below the bullish trendline since Aug (currently at 1.4510). Note that a break below would not change the longer term bullish view of new highs (see longer term below), but would increase the likelihood that this multi-month period of wide ranging since Nov is not yet complete (and would be looking to rebuy at lower levels). Support before there is seen at 1.4590 (earlier low) while nearby resistance is seen at 1.4755.
 
The longer term view remains unchanged as trade from the Nov high at 1.4965 is seen as a correction (wave 4 in the rally from the June low at 1.3265) and continues to suggest eventual gains above 1.4965 within wave 5 (see “ideal” scenario in red on weekly chart below). Be wary however, as the new highs would be seen as the final upleg in the rally since June, with further gains potentially somewhat limited and short-lived. Note too that an even more dramatic shift in sentiment to the bullish side would add weight to this view (contrary indicator), but at this point the longer term bias remains to the upside. Longer term resistance above the Nov high at 1.4965 is seen at the ceiling of the nearly 3 year bullish channel (currently at 1.5150).   
 
David Solin
Partner, Foreign Exchange Analytics
E-mail dsolin@fxa.com, (860) 767-9102
 
*See intraday scrolling tech blog at www.fxa.com/solin/comments.htm , Reuters FXAFX31 (does not include charts) and Telerate 57031. Previously emailed charts at http://www.fxa.com/members/charts.asp
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Foreign Exchange Analytics has it's roots in both the emerging information technologies and the global economy that characterized the last two decades.  As currency transaction volumes soared in the wake of the 1985 Plaza accord, the need for timely concise information on what forces were driving and would drive exchange rates became critical.   David Gilmore was one of a new breed of analyst that saw a void of relevant, market moving... More