Euro Falls Again

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By Humphrey Bo | November 11, 2008

LONDON — The euro dollar maintained its October undertone this morning spiralling down to another six-day low. From the height of early morning trades at 1.2800, the euro fell sharply to 1.2517 dropping over 280 pips against the US dollar by mid-noon. Could this be the sign of euro giving back some of its last three years gains?

The pair attempted pushing higher, only to hit gridlock at 1.2803 then began a trend reversal southward. Any hope of an upside continuation soon evaporated as the downside move soon swayed opinions and sentiments.

Euro Falls Again

This rejection saw euro trading the downside of 1.2517 by mid afternoon - a six-day low. What this reveal is that most traders are still not as confident to commit for the long haul for now. Keeping this uncertainty in mind, we expect to see further deterioration and thus keeping bearish traders excited.

Early trading today as London wakes to Asian session saw the pair consolidated to push lower from yesterday’s trading session of 1.2720. Current trading level remain transfixed to 1.2540 as intraday support holds at 1.2495. Any further break to the downside from this level could trigger an avalanche of a bearish momentum towards 1.2057 area. At the moment, these supports-resistances are what we are anticipate in the next few weeks of play.

Resistance	Support
R1= 1.2926	S1= 1.2057
R2= 1.3114	S2= 1.1822
R3= 1.3294	S3= 1.1630

These are numbers we have not seen since between late Nov. 2005 and early April 2006. In fact, they could not even be contemplated by many forex traders upto three months ago, yet we’ve blogged about them since March 2008. Nonetheless, it’s a further indication that the law of gravity also works in the market place – what goes up must come down.

On the contrary, ‘Tongues of fire’ might also hasten this expectation in an attempt to ‘assure’ confidence as they always say. Trade with caution and protect your positions. Have a great day of trading.

Definition: “Tongue of Fire”?
Tongues of fire refer to Government officials whose words are likely to inflame financial markets with volatility and thus causing significant movement in any direction as a result of their comments or reports. Examples of these are Heads of State, Finance Ministers, Central Bank Governors etc.

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