Friday, October 30, 2009
Short for yesterday was stopped out for a small loss yesterday as US GDP grew by 3.5% – more than expected and technically signaling an end to the US recession. There is still a lot of weakness in the US economy and much of that growth was driven by government programs/spending, but US stocks rallied nonetheless driving the EUR/USD past resistance levels. I talk about this a lot recently but you have to watch US stocks closely in this risk-appetite driven markets. Strong US stocks signal risk appetite which means the higher yielding Euro will perform better than the record-low interest rate USD will perform poorly. Yesterday was the strong day for US stock markets in 3 months – and the EUR/USD rallied over 100 pips.
Currently the pair is consolidating its gains in a tight 1.4820-1.4855 range which could make for a nice breakout.
Trading Idea: On the 4-hour chart we have a nice flagpole with a consolidation pattern forming in a flag pattern. Bias is to the upside. I will look to buy a sustained break of 1.4865 or, if the 60M candlestick is bullish buy near the bottom at 1.4820. Long targets would be 1.4895, 1.4925 and 1.4955. On a sustained break below 1.4815 my tendency would be to sell a rally for a re-challenge of 1.4750.
Nice weekend to all...blogger..Please smile at nuff..ha22