Here’s A Medium-Term Short Trade
The FX markets are
rather quiet this morning. Unlike last week, there appears to be
more players on the bear argument for the dollar, the result has been some
weakness and range trading. With key US trade data out on Wednesday, expect
little meaningful action ahead of that. Nonetheless, there are some nice
technical patterns setting up, we simply need a catalyst for trade entry.
GAP/USD:
We like this as a short as a medium-term trade.Â
The recent sell-off in the dollar has seen GAP lag relative to other currencies
like CAD, EUR and AUD. Intra-day model shows some support at 1.8770 and
longer-term resistance at 1.8780. If dollar firms, we see a re-test of last
weeks low at 1.8642.
EUR/JPY:
Presently a bit oversold, but we see this as a
strategic short going into 2005. Weekly trend-line was breached at 137.30 which
will put longer-term pressure on this cross. Next major support seen at 134.40
area. We are waiting for a minor rally to establish a short position.
Dollar Index:
Mixed signals presently, but longer-term
indicators suggest an upward bias. Positive data out of the US will likely be
needed to re-start some upside action. Short-term model suggests a move back
above 83.10 is needed to get short-term players on board, while 82.88 (50-day
ema) and the daily and weekly oscillators point to higher prices.
After last weeks solid showing, we are waiting
patiently to establish new positions. We remain long EUR/CHF at 1.5320 from
back on November 24, 2004.
As always, feel free to send me your comments and
questions.
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