Monthly Thread: February 2004

[rezo_s]

Greetings Everyone.

Aggressive sell off (euro) - the one we saw on Friday. It may have been expected after the failure to break 1.29, but it was still questionable whether it was too early or not to start buying the USD. Ok, that's all history now, so lets think about what is it there to look for.
I will be concentrating on the 4 majors, as there is enough interesting happening there not to look for other markets. But if someone has got any other requests, I can tell my opinion on it if it’s of any value; no problems - just let me know.
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EURUSD:
Lets take a closer look at EURUSD daily chart. After we broke the long term and strong trend line in the mid January (first sell off from 1.2900 figure), we saw the double bottom formation (green area). The double bottom was simultaneously forming a triangle (blue lines). The triangle was broken in the beginning of this month, after which we got the huge gap on 09 of Feb (opening below Friday closing). Now, as we see, the 1.2900 was unsuccessfully retested for a break North, and we are witnessing a sell off once again. 1.2480, which is the triangle support line may provide some support, but better support may be expected from the double bottom area around 1.2350.
At the moment its hard to foresee or assume whether there is a chance to go below 1.2350, but I think this time, it looks more serious, and if it really goes below 1.2350, 1.2100, followed by
1.1850-1.1900 are possible.
Its still too early to talk about any serious South direction for now, those are only possible scenarios, but indications are already pretty good. Technically speaking, its possible, but time is the question. North trend was very strong, but if move down persists, selling may become a good option in coming weeks. For now I am sidelined, but will be watching for further developments.

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[rezo_s]

GBPUSD
No need in much philosophy here to see that Cable was and is much more confident than all other major currencies against USD. New highs, very strong buying, but now I think its provoked by the overall USD strengthening. After the break which I mentioned in the beginning of the month, we got a very strong buying. At the moment its same story here as on Euro - sidelined, except for the fact that it may not as strongly be considered for selling as other currencies may be. This is only how things look at the moment, and as we know things change with the time.

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[rezo_s]

USDJPY: Very attractive for buying even though we saw very strong USD buying already. The possible target I see at the moment is 111 figure (to be more accurate, 111.10 – the 38% fibo of August 2003 – recent 105 lows). First resistance is coming from 110.00–110.50 area, after which the 111.00 should be triggered.
If we continue looking at the Fibo levels, we see that next important level coming is the 50% near 113 level. I don't know how relevant is it to talk about it right now due to the long lasting down trend. It took more than half a year to make this way down, so taking back 50% of it seems little too much in such a shot period.
To sum up, 111.00 seems reasonable to be seen in coming week(s), but afterwards and even on the way there, we may see selling anytime. Therefore, buying should be done with tight stops (not more than 50 bp). This is the only one out of major pairs I see as best to buy. Will see during the week how it goes. Once again, looking at overall picture, its best to stay away for some time and watch for further developments, but if buying USD, then this is the pair to do so.

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[rezo_s]

USDCHF:
Same as on Euro – for now sidelined, but USD may be a good buy next week(s). On the bigger picture USD is still very weak, and we can talk only about corrective move right now. Not more than that. Let’s see how it behaves around the first resistance area coming: 1.2650-1.2700. Afterwards, we may start talking about 1.29 as an initial target to start buying for.
I repeat that USD was, is and may stay very vulnerable for a longer period of time, so its better to wait for further signs of USD buying before going for it with confidence.
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That’s is for now.

Good Luck Everyone!

Rezo Shmertz



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