Friday, February 06, 2004

Euro USD News

Technical Outlook
EUR/USD’s failure yesterday at triangle trendline resistance favors continued range contraction. Intermediate-term outlook remains neutral within the triangle but above the 38.2% Fibo from the Nov - Jan bull wave we favor an eventual resumption of the long-term bull trend. Sustained break above 1.2650 short-term trendline required to trigger any sort of upside momentum. Intraday we favor the downside after yesterday’s inability to hold above the 20-day SMA. USD/JPY’s failure to develop downside momentum on the break of the 105.50 fib level makes the pair extremely susceptible to a short squeeze. Oscillator divergences and a positive cross on the slow stochastic further support the bull side and a potential upside run. 106.30 moving average resistance remains key, with a sustained break above required to trigger any sort of significant move higher. While the longer-term picture remains overwhelmingly bearish, we now require a break below the 105.00 handle to confirm a true resumption of the downtrend. More lackluster trade in USD/CHF as the pair remains confined to the triangle consolidation on the daily. We are still unclear whether the consolidation is a precursor to one last gasp higher or the calm before a resumption of the long-term downtrend. Below the 50-day EMA we favor the latter. Yesterday’s false break below the 20-day SMA and a hammer on the daily biases the upside intraday.

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