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EUR downside extension

December 7, 2012 by FxIgor

This text is from blog famous currency strategist Joel Kruger .
EURO RECAP – Quite a move in Thursday trade…..well at least for the Euro, with the single currency getting hammered on the back of a confluence of catalysts including; a dovish ECB Draghi (negative rate possibility), lowered central bank growth forecasts, Italian government turmoil, and more downgrades out of Greece. EUR/USD already seemed ripe for a pullback with the major pair tracking in overbought territory on the daily chart. Once stops were tripped below 1.3040, the floodgates opened up, with the market diving back below 1.3000.
See forex technical analysis video made by Joel:

PROBABLY BEST TO STAND ASIDE HERE – From here, it will be interesting to see how things play out, with critical short-term support in focus at pre-Thanksgiving holiday levels. The 1.2880 level is key, and a break would reinforce prospects for a fresh lower top in the Euro ahead of the next major downside extension. Nevertheless, if you weren’t selling up around the 1.3100 handle a few sessions back, I don’t believe it is worth selling now, particular in light of the end of week trade and expected volatility for the remainder of the day from the monthly US employment report. My best recommendation is to shift focus from EUR/USD and look to seek out other compelling opportunities.

OTHER OPPORTUNITIES – On such opportunity could come by way of the EUR/CHF cross which managed a very impressive surge earlier in the week, before fizzling out. However, the latest successful hold above the critical 1.2000 SNB barrier suggests that a medium-term higher low could now be in place around 1.2030, in favor of an eventual surge above the September 1.2185 peak and towards 1.2500 over the coming months. As such, any setbacks into the 1.2060-80 area on Friday are viewed as a formidable opportunity to build into a fresh long position.

WHAT’S ON THE WISHLIST – Another possible trade on my radar…well more like on my wishlist…is USD/JPY. I have been long this market for quite some time, but am eager for an opportunity to aggressively build into the existing position. I am not too keen about adding at current levels, but would be delighted to see just one more sharp pullback below 81.00 so that I can take advantage. The market has been pricing in an aggressively accommodative BOJ (Japanese government) going forward, and this has helped to fuel the latest rebound in USD/JPY from record low levels. At this point, it seems like everyone is looking to buy, and we may not see the desired pullback, but if we do, I will be happily waiting to pull the trigger. Any move into the 80.50-81.00 area would be a gift to bulls. Initial support now at 81.70.

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Filed Under: Joel Kruger oppinion

About FxIgor

I am forex trader from 2009. and I am making autotrading systems using Metatrader EA. In this blog I will share my thoughts about daily forex traders, market forexcast, top forex brokers.

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