Article originally published on innerfx.com and republished here with permission
Quote of the day: “Depend not on fortune, but on conduct.” ~ Publilius Syrus
Good morning. Contrary to my expectations – the dollar lost ground on Friday on hopes that the new leadership in Greece and Italy will help their countries and the Euro-zone, respectively, to avoid a financial disaster.
As we can see in the chart below, the euro is still in recovery mode, at least from a short-term perspective. Resistance formed around 1.3700 has been breached and next upside barrier is now seen around 1.3850. The median retracement of the full move from 1.4200 to 1.3485 also stands around 1.3850, so that makes this level quite challenging. Bulls are probably looking for a break above in order to consider new buying opportunities, targeting recent top at 1.4250. I, for one, still see this upward move as corrective and would rather wait for a selling signal.
The weekly chart is a bit more interesting as last week’s candle suggests that the recovery started at 1.3150 in early October is still underway. Anyway, keep in mind that rumors and optimism (more… or less based on reasonable facts) have been the main drivers of current recovery and we’ll most likely have more of the same, therefore technicals make little sense these days.
My plan to look for a selling opportunity on the potential break of support around 1.59 is on-hold
but on the other hand – looking for a buying signal on the break higher is also a plan to consider, because of the potential bull flag formation we have on the daily charts:
GBP is still one of the main CHF’s counterparts to benefit from recent SNB’s statements and there’s probably more upside to be seen. Support at 1.4400 seems quite strong, so buying it while it holds above 1.4400 seems a good bet