Technical Analysis - Euro

Friday, June 21, 2013, Marketing Communication Euro, Weekly The weekly chart on the euro is included to describe how the currency has been in a broad bearish trading range over the past five years, red region. In the daily chart below we zoom in to show the last leg higher within this bearish range in more detail. Euro, Daily The daily chart shows the move higher from the 2012 lows in more detail, over this period we can see the strong trend that had been in place until February, red diagonal line. In February the price action broke this trend, coincidental with the break under the 30 day simple moving average, and price fell to the 50% retracement level, calculated from the 2012 lows to the 2013 highs. From the stochastics oversold levels and the support from the 50% retracement area the euro rallied from the 2013 lows. Through April-May this buying formed a divergence with the stochastic, black lines, giving an early warning that the buying momentum had stalled at this attempt. From this divergence the euro did indeed stall and once again came back to the 50% retracement support. Crucially the most recent highs from this second test have moved ahead of the April-May highs, creating a nearer term bullish trend, green line, with higher highs and higher lows from late March. This trend also picks up the lows from November 2012. This naturally adds some confidence to the bulls. In the near term however the stochastic has turned from overbought conditions, suggesting some near term weakness ahead is likely, which could pull the currency down to this bullish trend line. But while the price action remains above this bullish trend support the outlook remains with a positive bias for the longer term. Leaving an optimistic outlook while the price action holds over the current trend line, albeit with some near term risks of some slight weakness. Moves under the 50% retracement level at 1.2877 would cause the outlook to turn more negative, or moves under the March lows at 1.2747 for the more cautious. Euro, 4 Hourly The 4 hour chart shows this last leg higher in more detail. The price action has broken its near term trend, red diagonal line, and has dropped down to the 38.2% retracement level of this move. The stochastic has dropped to oversold conditions.  So in the near term some minor support could materialise here. Looking only at this timescale traders could expect to see the 38.2% level holding here, however due to the negative tone given from the daily chart the expectation is that on any break of the 1.3195 area, the euro could quite rapidly slide to the 50% level at 1.3127 initially, and even to the 61.8% level at 1.3059. So for the days ahead we see 1.3195 as key, a break below could trigger a rapid move to 1.3127. Suggesting a decent trading opportunity on any such move. In the interim and while the euro stays above 1.3195 the outlook stays more neutral following the trend break last week. CFD Sales/Traders 0044 (0) 207 894 8883 cfdsales@cantor.com Equity Spread Bet Sales 0044 (0) 207 894 8800 sales@cantorcapital.com Graphs Graph images are created on Bloomberg, and remain under copyright to Bloomberg. Depending on your email settings the images contained in this note may not be downloaded correctly on the first viewing. Select the view 'Web version' link on the header, which will open a browser window that will display the images correctly. Unsubscribing From E-mails If you would like to be removed from all Cantor Capital Commentary notes then please click on the ‘Update Preferences’ link on the header, or the ‘Edit your subscription’ link on the footer and select the ‘Unsubscribe’ link at the bottom of this page that appears. This will remove your email from all Cantor Capital Commentary distribution lists. 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