Euro vs Dollar Chart 18 Nov 2009

Euro vs Dollar Chart 18 Nov 2009

Yesterday’s price action for the euro vs dollar merely confirmed once again the sideways price action of the currrency pair at present, as we now consolidate at this level into a strong pennant pattern, with the point of the flag centering around the 1.49 price point, and suggesting that at some point we will see an explosive breakout from this level. The question of course is when is this likely to occur and secondly in which direction which are both extremely difficult questions to answer.   The ‘when’ is impossible to predict, and as traders we simply have to wait for the breakout to occur and then take advantage in due course, unless you are trading an options trading strategy such as a straddle in which case you neither know nor care about the direction just so long as it does eventually breakout!  The direction  is the other issue, and given the increasing series of higher lows on the daily candles and the apparent support from the moving averages below, my personal view is that we should see the break to the upside, with a move up and through the tricky 1.50 price level, and then on towarsd our initial target of 1.52 in the short term and 1.55 in the medium term. With the US dollar continuing to look extremely weak on the US dollar index chart, this outcomes seems more likley at present, but ofcourse until we see this occur, we have to wait for the euro vs dollar chart to provide us with the relevant signal, but rest assured, a breakout will occur in due course, and the longer this price action continues the more violent will be the move when it occurs, so be prepared!

The only item of fundamental news for Europe today was the Italian Trade Balance which came in worse than expected at 0.90bn as the market waits for the most important item in the US this afternoon – the unemployment claims which are forecast to come in at 503k – slightly worse than previous.  Other news releases for the US include the Philly Fed Manufacturing Index, CB Leading Index plus an appearance by Treasury Sec Timothy Geithner before the Congressional Joint Economic Committe on the topic of Financial Reform.

Support & Resistance for the Euro Dollar:

S1:  1.4885    R1:  1.5006

S2:  1.4817    R2:  1.5059

S3:  1.4764   R3:  1.5127

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