Euro, Monthly
|
 |
The euro monthly chart above shows how the currency has had a relatively strong performance over the past 10 years despite the wider concerns on Greece, Portugal and Spain.
Retracement levels can often prove useful in FX trading and the lines calculated from the 2000-2008 highs seem to have caught much of the price action, red lines. The sell-off in 2010 for example and the moves lower this year found support off the 1.2134 area, 50% level.
So for the longer term the outlook on euro looks strong while this 50% level holds. As a result any moves down to this area would be seen as attractive longer term entry levels. Breaks under this major long term support would start to suggest more serious full retracement back towards the 0.8233 lows, as the general trend would appear to be 'turning over' somewhat.
In summary then the currency is in a natural and expected retracement range following the strong trend posted from the turn of 1999. Only a break under 1.2134 would negate this relatively optimistic outlook.
|
Euro, Weekly
|
 |
Moving down to the weekly timescale the outlook does appear more cautious, although as detailed above the 1.213 area looks to be offering major support. Of concern is the lower highs over the past few years as each new euro-area crisis crimps the level of buying interest, green line.
The Weekly chart, like the monthly chart, however also suggests that the bulls are not expected to get too concerned on any weakness while the currency holds above 1.2134. Leaving trading positions skewed to the positive side for the remainder of the year.
|
Euro, Daily
|
 |
Drilling down to the daily chart we see this last leg higher in more detail. Drawing retracement levels on this near term move, red lines, we can see how the slight weakness in recent days has not been significant enough to clearly break in to the retracement range between the 38.2% and 61.8% levels. (1.2741-1.2471)
So we can see traders considering buying the currency here expecting the 1.2741 area to offer some support, breaks under here would open up the lower channel of 1.2741-1.2474. The strength of this recovery from July is quite weak as the high in October failed to break the highs in September. So while the current levels may look attractive to some traders, on a risk/reward basis, we would stay cautious on any upside targets. As we would see buying capped under the October highs of 1.31 and would even be cautious of any moves up to the 20 moving average, grey line on chart.
In summary thought the longer term outlook is far from as dire as you would suspect reading the general press. The medium term is more neutral but still with a trading bias, and the short term outlook also looks tempting for the active, albeit with tight stops.
|
Graphs
Graph images are created on Bloomberg, and remain under copyright to Bloomberg
|
Contact US
|
Regulatory Disclaimer
This market commentary note (“note”) has been issued by Cantor Index Limited (“Cantor Index”), which is authorised and regulated by the Financial Services Authority (“FSA”). This note has been prepared and distributed for information purposes only. This note may contain information obtained by Cantor Index from third parties; the source of information will usually be disclosed. Cantor Index makes no representation and gives no warranty as to the accuracy or completeness of the contents of this note. Any person placing reliance upon this note does so at their own risk. Investors should consider this note as only a single factor in making their investment decision. The investment discussed in this note may be unsuitable for investors depending on their specific investment objectives and financial position. Cantor Index, its officers, employees and affiliates shall not be liable to any person in any way whatsoever for any losses, costs or claims howsoever arising from any inaccuracies or omissions in this note or any reliance on this note. The recipient is strongly recommended to see independent legal, tax and financial advice. Past performance is not necessarily a guide to future performance. Income from investments may fluctuate The price or value of the investments to which this note relates; either directly or indirectly, may fall or rise against the interest of investors.
This note should not be considered to be a solicitation nor an offer of advice for the purposes of the sale or purchase of any security, investment or derivative. The information contained in this note is not intended to form the basis of any investment decision and should not be considered a recommendation by Cantor Index or any other person in relation to any of the companies, stock, commodities, currencies or other markets mentioned / referred to in this note. All the information contained herein is based upon information available to the public and has been obtained from sources believed to be reliable. However, the information contained in this note has not been verified by Cantor Index and Cantor Index undertakes no obligation to provide recipients of this note with any additional information or any update to or correction of the information contained in this note. This note is provided by Cantor Index and may be forwarded unamended and in its entirety. This note may not be used in whole or in part to create any other work. All rights reserved.
Cantor Index Limited is authorised and regulated by the FSA under Firm Reference Number 194414
Registered in England No. 03489923
Registered Address: One Churchill Place, Canary Wharf, London, E14 5RD
|
Risk Warning
Spread Bets are leveraged products placing your capital at risk. Losses can quickly exceed your initial deposit and thus require you to make additional deposits at short notice to maintain your positions. Leveraged products are not suitable for all customers. Please ensure you understand the risks involved before opening an account. Cantor Index provides an execution only service and does not offer investment advice. You should ensure you fully understand the risks and seek independent financial advice if necessary. These products are not intended for people under the age of 18 or for US residents.
|
