Resistance : 1,5620-30/ 1,5655/ 1,5670/ 1,5700/ 1,5730
Support : 1,5550/ 1,5520-25/ 1,5490-00/ 1,5450
Comment : The wider sideways formation that sets the ranges for euro's move these last months was confirmed for one more time, as bears gained momentum leading euro to a decline near the limits of the downtrend reversal. Bulls in the lows of 1.5400 were helped by the chairman of ECB Jean Claude Trichet, who warned about a potential rate hike, while bears were helped by comments regarding strong dollar from Bush and Henry Paulson mentioning the intervention as way of supporting currencies. The only thing that is certain is that there is an attempt from both sides to support their currency and we will wait to see the results…
After yesterday's facts, it is very possible that we are in the formation of a downward wave within the sideways consolidation, which may be as quick as the previous upward wave.
The short trend is now bearish and a downward break of 1.5560 will cancel any possibility of an upward resumption.
Below 1.5560, next targets are at the area of 1.5470-90, which is considered as a strong support level. Next targets are in the base of the formation in the area of 1.5370-00, but we will be cautious regarding its immediate reach for the time being.
The area of 1.5620 is the first resistance level, followed by a more important at 1.5660-70. If yesterday's bears have strength, retracements should not breach the area of 1.5670. In an opposite case, the area of 1.5730-50 could be reached again. If high volatility occurs it will be difficult to have a clear strategy and we should wait for a more clear view in the short term. For the time being we will use any opportunity within the ranges of the wider sideways consolidation...
TRADING EUR/USD : Our strategy regarding sell positions proved accurate, even if the decline was further than expected, opening our sell positions at the lower levels. The current trend is bearish and it will be followed until important support levels are reached.
Sell positions will be tried in any retracement towards 1.5650-60 area, adding more at 1.5700 with stops above 1.5730. Sell positions would also emerge at a potential break of 1.5555, having as target the area of 1.5480-90. In that case, stops should be set above the 1.5620 area...In the area of 1.5470-90 we will turn on the bulls side, with stops below 1.5445...
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