NEWS / Foreign Exchange

Euro might form weekly reversal

Daily Currency report for Friday October 13 2006

This is only a guide. Please refer to our specific entry signals for exact entries and stops.

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This Week's Economic Calendar
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Date ET Release For Actual Briefing.com Consensus Prior Revised From
Oct 10 00:00 Treasury Budget Sep (TBA) $55.0B $45.0B $35.7B
Oct 10 10:00 Wholesale Inventories Aug 0.8% 0.6% 0.8%
Oct 11 10:30 Crude Inventories 10/06 NA NA 3355K
Oct 11 14:00 FOMC Minutes Sep 20
Oct 12 08:30 Initial Claims 10/07 310K 312K 302K
Oct 12 08:30 Trade Balance Aug -$66.0B -$66.5B -$68.0B
Oct 12 14:00 Fed's Beige Book
Oct 13 08:30 Export Prices ex-ag. Sep NA NA 0.4%
Oct 13 08:30 Import Prices ex-oil Sep NA NA 0.5%
Oct 13 08:30 Retail Sales Sep 0.1% 0.2% 0.2%
Oct 13 08:30 Retail Sales ex-auto Sep -0.1% 0.0% 0.2%
Oct 13 09:50 Mich Sentiment-Prel. Oct 86.0 86.0 85.4
Oct 13 10:00 Business Inventories Aug 0.6% 0.5% 0.6%

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EUR/USD

Weekly Trend direction: Bearish

Weekly trend reversal level: 1.2780

S/R levels: 1.2620 - 1.2670

Strategy: Whilst above the weekly trend reversal level, sell rallies to resistance levels after an entry signal.

Medium term: The Euro has dropped below immediate support at 1.2670, but remains in the broader 1.2450 - 1.2950 range which has dominated since June. This means range trading should continue until the Euro breaks out one way or the other.

Today: Unchanged despite (so far rather uninspiring) efforts to base at 1.2500. Like many currencies, the euro has dropped towards medium term support at 1.2500, but remains within this year's trading range of 1.2500 - 1.3000. Despite a bearish direction in our model, the euro is at the bottom of the range and oversold, with small signs of reversal on hourly and daily charts. We prefer to try long positions at this juncture, with stops below 1.2500. Targets are the S/R levels above. Note that a close above 1.2570 will complete an hourly and weekly reversal pattern.

EUR/USD Hourly chart:



EUR/USD Weekly chart: