GBP/USD Short Opportunity - Trendline Hit In 4hr Chart

The GBP/USD is in a downtrend since late Nov 2009. With the strong gains (+240 pips) during today's US session (30.12.09), the pair has reached the upper trendline of the of the downtrend channel.

Applying a trend following strategy this is an opportunity for a short entry.

• P: 1.6080
• SL: 1.6200
• First target 1.5800

Please consider that liquidity is relatively low during holiday trade, which can lead to price spikes in either direction.

EUR/USD Ready For Explosive Break-Out?

The EUR/USD is trading in a narrow range along the 1.4730 support area since the steep fall initiated by the NFP release on Fri 04.12.09. The longer the pair stays range-bound, the more likely a strong breakout becomes.

The daily chart (see below) clearly shows the 1.4730 area as support/ resistance zone (Sep swing high / Oct-Nov swing low). The daily long-term uptrend is still intact. Positive economic news could trigger risk appetite leading to investments in growth assets / currencies, resulting in a lower USD/ higher EUR.

However, the fall under the 20 day simple moving average and the fall initiated by the NFP data created a short-term downtrend (see 1hr chart below). Also the mantra of the past months “better economy > more risk appetite -> lower USD” might not continue indefinitely. The US NFP results (-10k jobs instead of the predicted -100k) were a first indication of that change. More positive US data could trigger a market opinion that US interest rates might rise earlier than currently expected. That would lead to higher USD -> lower EUR/USD.

Currently the direction is not clear. But the longer the EUR/USD stays within the 1.4730 range, the stronger the breakout will be. In which ever direction it will go. I will stay sidelined for now and go with the trend if a strong breakout moves prices out of the 1.4690 – 1.4760 range. Don’t get caught on the wrong foot!

EUR/USD - daily

EUR/USD - 1hr