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TECHNICAL ANALYSIS


Euro-Zoned

09/30/11 09:23:57 AM
by Austin Passamonte

Here's the midterm outlook for 6E, 6B, and 6C currency futures.

Security:   Currency futures
Position:   N/A

It wasn't too long ago that everyone spoke of the US dollar's demise. Fed-driven quantitative easing programs had firmly entrenched a weak dollar policy inside the US. Then along came the euro woes, and a rapid unwinding of the "risk-trade" carry.

FIGURE 1: EUR/USD, WEEKLY
Graphic provided by: NinjaTrader.
 
The EUR/USD peak highs near 1.49 zone seem like forever ago. A breakdown of the ascending trendline from 2010 to 2011 as of two weeks ago practically ensured lower price level tests to come. Next, price magnets appear to be 1.32 and 1.30 levels off Fibonacci projections from 1-2-3 swings downward. See Figure 1.

FIGURE 2: BRITISH POUND, WEEKLY
Graphic provided by: NinjaTrader.
 
British pound futures portray a rather messy ascent and tumultuous drop from mid-2010 through late September 2011. Similar 1-2-3 lower projections point out 1.52 and 1.50 zones as the next probable areas of attraction in the visible future to come. See Figure 2.

FIGURE 3: SWISS FRANC, WEEKLY
Graphic provided by: NinjaTrader.
 
Swiss franc futures traipsed a path of gradual and then parabolic ascent in the same year's time period. What was considered a safe-haven currency and proxy for gold came crashing down when valuations were coupled to the euro. From here on, it's a proxy symbol to the euro, and the 1.000 level, which served as resistance and support before, is likely to be tested as such again, soon. See Figure 3.

Currency shocks around the world are still in the stages of uncertainty and fear. Rapid reaction and in some cases overreaction will continue. There is no technical reason to expect anything other than trend continuations lower. Anything is possible at any time in any financial market, but the existing trend is your friend until change is proven otherwise.



Austin Passamonte

Austin is a private trader who trades emini stock index futures intraday. He currently trades various futures markets from home in addition to managing a trader's educational forum

Title: Individual Trader
Company: CoiledMarkets.com
Address: PO Box 633
Naples, NY 14512
Website: coiledmarkets.com/blog
E-mail address: austinp44@yahoo.com

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