Monday December 28, 2009 - 17:18:16 GMT
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FXTimes - www.fxtimes.com
EUR/USD - Stalking Retracement - Daily Technical Update (12/28/09)
- Daily: Ahead of the Christmas holiday, the EUR/USD
showed its first sign of a reversal, which for now will be considered
only a retracement until further evidence points otherwise. (Refer to Daily Video Technical Update 12.23.2009).
- So far, this has only been a minor correction as it is testing a
short-term resistance (see 4H). The stochastic in the daily, is crossed
and turning back into non-oversold levels. This current correction
rally should be stalked to time a continuation swing.
- 4H: This correction may already be over, as the
market tests its intermediate term MA as resistance to confirm
downtrend. Looking at the 4H time-frame, we see the market is
overbought, and we may be forming a very near-term double top.
- If a decline follows and breaks below 1.4350 in the US session, it
may be restesting the 1.4230 area as support in the Asian/European
session. Then the market may be consolidation further and stay in a
range, or the market can break below signaling continuation towards
1.3800 (Refer to the Video update).
- So basically, with near oversold conditions in the daily, a bearish
outlook may be too aggressive, while a bullish outlook is against the
- Having a bearish outlook during oversold stochastic readings is not
imprudent as strong trends tend to cause momentum indicators to be
overextended for a period of time.
- However caution should still be used during this
consolidation period. Going down to 1H time-frame or even 15-min may be
necessary for a very short-term bearish outlook, that MAY turn into a
- If the current rally is indeed a retracement, BUT one of â€śabcdâ€ť
pattern, then there may be a further leg up to the 1.4500 area before
truely completing the retracement.
- With this in mind, bearish action ie. shorting from 1.4400
to 1.4230, should be carefully monitored for quick exit signals, as
that may be the start of a second leg. Re-consideration of bearish
outlook at 1.4500 depends on manner of rally and bearish signal from
Commodity Trading Advisor
Information and opinions contained in this report are for
educational purposes only and do not constitute an investment advice.
While the information contained herein was obtained from sources
believed to be reliable, author does not guarantee its accuracy or
completeness. CMS will not accept liability for any loss of profit or
damage which may arise directly, indirectly or consequently from use of
or reliance on the trading set-ups or any accompanying chart analyses.
Foreign currency trading is not conducted on an exchange. CMS is
acting as a counterparty to its clientsâ€™ transactions and as a result,
CMSâ€™ interests may be in conflict with its clients. Since CMS acts as
the buyer or seller in the transaction one should carefully evaluate
any trade recommendation provided by CMS or any of its solicitors.
Foreign currency trading involves a substantial risk of loss and may
not be suitable for all investors.
All screenshots are made from VT Trader 2.0 and are of actual market data at the time of the screenshot.
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