Currencies - Short-Term Outlook

In these updates our focus is to identify the trend on the daily chart – the so-called Short-Term (ST) trend (this trend usually lasts several weeks to several months) and to formulate a hypothetical trading strategy that usually aims for 300-600 point moves in the major currency pairs risking 100-200 points. This analysis is updated biweekly: before the open each Monday (usually posted during the weekends) and between 9:00 and 10:00 CET on Wednesdays. (CET stands for "Central European Time")

EURUSD
GBPUSD
USDJPY

Main analysis

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Update for: 2010-08-30 - 2010-09-05

Posted on: Saturday, 28 August 2010 20:39

EURUSD: 1.2762

Short-Term Trend: sideways

Outlook: EURUSD has traded in a very narrow range for the past week or so. As result, the price pattern remains the same as it was a week ago. However, the market has now become oversold - you can take a look at the daily Stochastics which is deeply oversold now, though it has not moved into a sell signal yet. We continue to expect a decline twd 1.2347, but now it is unclear if the pair will go down directly from here, or will 1st undergo a stronger pullback twd 1.30/1.31 before heading lower. For that reason, we do not like the previous short idea that we discussed in the preceding updates.
The bearish scenario (that implies direct losses from here) will be confirmed if we see a move below 1.2590 this week. Until that happens, the daily outlook remains neutral.

Strategy: We prefer to stay out now. If the previous short strategy is activated in early Asian trading on Monday, we will exit at European open.

Next Update: Wed, 09/01/2010, 09:00 - 10:00 CET

Brief updates

Posted on: Wednesday, 01 September 2010 09:08

EURUSD: 1.2718

Short-Term Trend: sideways

Outlook: We continue to expect a move twd 1.2347 and 1.2145 in this market but the lack of downside momentum and the oversold conditions on the daily Stochastics indicate the move down may not occur directly from here. Instead, the market may chose to go higher 1st twd 1.30/1.31 area and then to resume its decline. For that reason, we are not interested in going short now and we prefer to stay out.

Strategy: Stand aside.

Next Update: Sun, 09/05/2010.

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