GoLearn Forex Analysis 14/12/2009

Euro – Headed for a Tailspin? By GoLearn Forex

EUR/USD:

The EUR is perilously close to falling into a tailspin. We have been stating for some time that a candle appearing below the 50 day Moving Average (MA) would generate a strong signal for a Short entry. As you can see in the Graph below that signal occurred last week, with the 50 day MA currently holding at 1.4880 while the EUR is trading at 1.46.

The EUR is now on the cusp of an even larger fall. It closed last Friday’s session at the 100 day MA an even more significant breach than the 50 day MA. Perhaps even more troublesome for the EUR is that it is just a hairsbreadth above 61.8% Fibonacci level at a handle of 1.4621.

INSERT CHART EUR

DEC-13-EUR

A close below the 61.8% Fibo level coupled with a close below the 100 day MA as they converge may equal real trouble for the EUR. The EUR has not been south of the 100 day MA since April 2009 which coincidently occurred when the 100 day MA and Fibo 23.6% level converged. The EUR proceeded to advance 14.6% from that point. We therefore target the 50% Fibo level with a handle of 1.4184 as the next support level should the EUR breach the 61.8% Fibo level.

USD/CHF:

The CHF is another currency holding at a very pivotal level. With Friday’s session closing just below the 100 day MA the CHF is trying to hold its ground against the Greenback. The Swiss Franc has been one of the benefactors of Gold’s jump in value. However, as the Dollar has rallied and Gold prices have begun to fall so has the CHF.

The Franc closed above its 50 day MA for the first time since August, representing only the 3^rd such close since April of 2009. This coincided with it’s last close above the 100 day MA. The Franc has another issue to contend with and that is the 23.6% Fibonacci Retrace level created from the CHF low of 1.20 back in March of 2009.

INSERT CHART CHF

DEC-13-CHF

If the CHF closes above the 100 day MA and the 23.6% Fibonacci level at a handle of 1.0402 is breached then we would expect the CHF to test support at the 38.2% Fibo level or 1.0701.

Bona Fide Recovery Seems in Order by GoLearn Forex

Global Equity Markets closed higher as the prospect for a bona fide recovery now seems assured. The Markets were able to shake off credit fears and focus on continued positive economic data coming out of the U.S. On Wall Street the DJIA closed up 65.67 points to 10,471.50 on better than expected Advanced Retail Sales figures.

The Greenback continued it rally as it advanced on positive economic data, breaking the 9 month long “positive equities to poor dollar” correlation, for a second time in 1 week. The DXY touched 76.725 before retreating slightly to close at 76.573. Another positive session for the Greenback and it may take out the 100 day MA.

In the commodity space both Gold and Oil were down. Gold lost 15.60 to close Friday’s session at 1,115.40 while Oil closed just below $70 a barrel for the first time since September 29^th. Gold has lost nearly 9.5% since its high on December 3^rd and is just a few dollars away from closing below its 50 day Moving Average.

In the Euro-zone for Monday, Employment figures will be published on Tuesday. U.S. PPI numbers will print as well as the Empire Manufacturing data. In Australia, GDP numbers will hit the wire on Wednesday, as will Housing Starts and Building Permits in the U.S. However, investors will be tuned in on Wednesday to the FOMC rate decision. Although no change in rate is expected, traders are hoping for the accompanying statement to shed light on future rate hikes and economic policy as continued positive economic data continues to print.

Upcoming Forex Events for December 14, 2009-12-14

CHF PPI (MoM) Forecast 0.20% Previous -0.40%

EUR Industrial Production (MoM) Forecast -0.50% Previous 0.30%

CAD Capacity Utilization Rate Forecast 67.80% Previous 67.40%

AUD RBA Meeting Minutes

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