Technical Analysis - Euro

Thursday, July 11, 2013, Marketing Communication Euro, Monthly The monthly graph is included to show the 20 year performance. From the 2000 lows the euro posted a move up to the 1.6 highs in 2008. The resultant selloff brought the currency down to the 50% area 1.2195 on a couple of occasions, red lines. 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 and fell to the 50% retracement level, calculated from the 2012 lows to the 2013 highs. From June the euro has once again slipped down to the 50% retracement area, with the last wave of selling pulling price action down to the April 2013 lows, black line. Ben Bernanke’s comments to appease markets concerns on Fed tapering has allowed the price action to rally quite sharply in the past couple of days. This rally brought the price through the 20 period moving average, but only on an intraday basis. The Stochastic has started to turn and was suggesting a possible period of strength ahead, but as so much of the upside target has already been reached the outlook is more questionable; as traders positioned for an upswing may already be taking profits. Buyers from April will stay confident while major support at 1.2750 holds, black line.  A break under 1.2750 could trigger more rapid moves lower as stops would be triggered. On such a break we would suspect the November 2012 lows, at 1.2659, and the 61.8% retracement level, may not be enough to halt the slide. The buying seen in recent days is likely to have been undertaken by weak hands who could be shaken off positions quite easily, so the risks of a return move to the 1.2877 area are quite high. Leaving a nervous outlook ahead as the near term buying expected has materialised quicker than expected and could equally evaporate quite quickly, although we do see traders having a long bias, while the 1.2750 area holds. 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. 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