Markets remain very cautious after the shock of last week. The most important thing we see in afternoon trading on the FOREX market is that European selective slow their profits that restrains risk crossings. Europe has opened higher today with gains to 1% and then has turned around. Investors still feeling his clothes after the shock of last week.
We believe that we should see progress at intersections risk if the bags permit and risk aversion is mitigated. But also there have been significant changes regarding the situation of bygone days. Greece’s problem in particular and sovereign risk generally remains latent in the markets. Logic tells us that after a few weeks of strong gains earlier in the dollar, the yen and the Swiss franc, they should give momentum in favor of other currencies that have been severely punished.
As we indicated last Friday, we had to follow closely the evolution of the ‘commodity currencies’ such as the Kiwi, Aussie and the Loonie. These began to recover and has been a trend reversal signal. This makes us bet on a greater appetite for risk ahead of the next sessions. We must purge excesses, but we are not entirely clear that the market wants to trend down.
The euro / dollar after losing on Friday the 1.3600 support went to a minimum at 1.3585 from where it bounced . Today you go to a daily maximum at 1.3714. If it managed to overcome the resistance of 1.3747 would give a good bullish signal.
As we see on the weekly chart, it takes four consecutive weeks of falls and everything seems to indicate that they will slow down. Last Friday hit a crossing of the last 12 months in 120.70. After the deep bearish candles has been drawing the most logical seems to be betting on long positions. Moreover, in this case we must follow closely the evolution of the stock markets since this crossing has a very high correlation with them. In view of the hammers with bullish implications of Dow Jones and S & P; 500 bet on long positions should be clear.
It would be normal to bounce crossing was hard and find the resistance that comes in the 124.39 and the 127.00. Another factor that makes us bet is excessive rises oversold level neutralizase at least half of sailing yesterday. Furthermore, as shown in the stochastic crossing moves clear levels of overbooking.