The Following is you daily EUR/USD outlook for March 19, 2010.

The EUR/USD is generally a strong trending currency, but for well over a month the pair continues to elude it’s tendency.  Moving in a choppy fashion making higher highs over the past couple weeks, indicating an upward bias, the drop on Thursday back below 1.3640 once again shifts the short-term outlook back to neutral.

Previous posts have included warnings about the high likelihood of false breakouts, and this continues to be a low probability environment for trend traders.  There is a need to avoid the wanting of being the first person into an emerging trend – a legitimate breakout will provide ample profit opportunity.

From Yesterday’s post here are levels to watch within the range:

“A drop below this support level [1.3640] indicates a move test further support at 1.3620, 1.3540 and range lows if 1.3520 is penetrated.”

Targets on the upside are: 1.3840, 1.3920 and 1.3940-1.3960.  Resistance inside 1.3820 comes in at 1.3650 and 1.3750-1.3760.

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Cory Mitchell, CMT

~Know your risks when trading. Please read the Legal Disclaimer page.

The following is your daily EUR/USD outlook for March 16.

Like a child who refuses to clean his room, the EUR/USD also refuses to move with conviction.  Yesterday I posted that a pullback into the 1.3700 region was expected but movements much lower indicate a further move down may ensue. So far the pair has pullback as far as 1.3640.  Additional support comes in at 1.3620.

In recent price action we do have higher highs and higher lows indicating the start of uptrend.  For this (short-term uptrend) to continue the pair will need to stay above 1.3550.  A drop below that indicates a bull trap and a re-test of range lows at 1.3430.  The “saucer” like formation starting from early February makes that scenario less likely than a move higher.

Ultimately 1.3800 remains the level to watch (on the upside) as stated yesterday.  Even though some swing highs were broken on Friday resistance remains at 1.3800 and just below 1.3850.    Prior to this minor resistance is now likely at 1.3730-1.3740.

The pair trades at 1.3675 at the time of this writing.

Fed day today. Be prepared as this could be the catalyst of a trend.

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Cory Mitchell, CMT

~Know your risks when trading. Please read the Legal Disclaimer page.

The S&P closed out a strong week, closing just below 1150.  Highs (January) are just above 1150 so the stock market sits on the verge of a breakout to the upside.  In late February and early march we got confirmation that the sell off down to 1045 was a “bear trap” and the daily uptrend has remained intact since those lows were put in on Feb 5.

If that breakout occurs the overall target is 1194-1200.  That said, the weekly average movement of the S&P is just under 31 points so it will take some some time to reach that target.  Short-term targets are 1162 followed by 1174.

The blue lines on the chart mark expected support levels on pullbacks.  At the moment they correspond with support at 1126 and 1116-1113 – these levels are fixed while the blue lines are sloping so their support values change over time.

At this point a re-test of recent lows near 1044 is highly unlikely.  A close above 1151 would indicate a strong likelihood of another wave higher.  The advance has been sharp and I do expect a pullback to the trendline but overall the outlook is bullish based on the price movement.

I continue to dislike the fundamental picture especially with some of the proposed programs coming out of Washington.  But I will keep this technical and will address my “fundamental” issues in my weekend Newsletter (sign up on the right – it’s free!).

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S&P 500 Daily - FreeStockCharts

Cory Mitchell, CMT
~Know your risks when trading. Please read the Legal Disclaimer page.

The following is the weekend recap and looks at a longer term analysis of the EUR/USD than what is covered in the analysis I post each day in the Daily Outlook.

The pair made a definite effort to break to the upside.  Shorts in the EUR are very high and a “short squeeze” could occur if the pair manages to get above 1.3800.   In addition to this, the daily downward trend was penetrated on Friday, but closed just below it.

Targets are now in sight on the upside at 1.4030 and 1.4170.  A short-term upward trendline is now in place as can be seen on the chart (below).  A break above 1.3800 as well as the daily downward trend line makes a re-test of the lows near 1.3440 a low probability possibility in the near term.

The pair closed at 1.3767 (or close to it) and the weekly average movement is about 300 pips.  This put our first target within reach, but the second target is beyond what the typical movement would indicate for this week.

On the downside, old resistance will is now likely to act as support at 1.3700.  Occasionally I mention a “confirmed breakout”.  In this case a confirmed breakout is when the pair pulls back after a breakout (as it has done) and respects a primary support level (1.3700 in this case) and then pushes higher again.  If you think in terms of a trend, this set-up creates the initial stages of a trend – higher highs and higher lows.  We do not always get “confirmation” though as sometimes the market does not pullback to near the breakout point.

Further support comes in at 1.3600 which is our short-term daily upward trendline and also at 1.3540.  Beyond this key support is at 1.3440 or the range lows.

Also of note is the “bowl” formation we can now see from the daily price action between early February and now.  This also indicates an upward bias.

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EUR/USD Daily - FreeStockCharts

Cory Mitchell, CMT
~Know your risks when trading. Please read the Legal Disclaimer page.

The following is your daily EUR/USD analysis heading into March 12.

The pair barely had a pulse Thursday, covering a range of only 70 pips at the time of this writing.

I feel like a bit of a broken record saying the same thing every day, but I continue to be of the view that waiting for a trend is superior to trading within the range where support and resistance hold little significance.  That said there are a several points to watch…

Currently we are near the upper end of the range, 1.3700 and 1.3740 are likely resistance levels.  Beyond this resistance comes in at 1.3800 and 1.3840.  Breaking above 1.3800 indicates a further move higher as the downward daily trend would be broken.  Given that false breakouts are highly probable, a resumed breakout direction move after a pullback is my preferred method of entry (ie. breakout, pullback, move back in breakout direction, entry).

Minor support comes in at 1.3620 followed by 1.3540 and 1.3440 – this is a pivotal level and very likely beyond the reach of Friday’s daily range, but a move below indicates another leg in the downtrend.

—–

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Cory Mitchell, CMT
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The following is your daily outlook for the EUR/USD -March 11

A push higher on Wednesday still kept the pair lower than the previous swing high, thus tightening the short-term triangle formation.  The high Wednesday is within a couple pips of the downward trendline (hourly) which connected the last two swings highs.

Ultimately the pair remains between the major pivotal levels of 1.3740 and 1.3430.  I have pointed this out many times, but support and resistance within this range are not crucial, and since the EUR/USD is a trending currency trading with the range is not an ideal strategy.

That said, there are of course opportunities for short-term traders.   The minor trendline resistance mentioned above comes in at 1.3670 with horizontal resistance at 1.3680.  1.3700 ad 1.3740 are more significant resistance beyond.  Movement above 1.3740 indicates an further upward correction.

Overall trend still remains down on the longer term charts, and the pair works through a sideways correction.    Support is likely in the short-term through 1.3630-1.3615 followed by 1.3540-1.3530.  A break beyond this is likely to challenge the lower portions of the range, namely 1.3500-1.3490 and 1.3430.

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Cory Mitchell, CMT
~Know your risks when trading. Please read the Legal Disclaimer page.

Here is your daily outlook for the EUR/USD – March 9, 2010.

The pair continues to move in a sideways fashion.  On the hourly chart we have converging short-term trendlines forming a triangle .  Given that the triangle has formed within a well-established range does not indicate a breakout.  Although, a move above 1.3715 would be our first indication of the possibility, yet would need to pass the resistance levels mentioned below to be a breakout.

The trend remains down, although the EUR/USD is in a correction (albeit sideways).  Downward trendline intersects between 1.3750-1.3800.  Significant horizontal resistance comes in around this 1.38 level as well.

In the short-term, resistance comes in at 1.3700 and 1.3740.  Beyond this there is a resistance area between 1.3790-1.3840.  A break beyond this would indicate a reversal and a move higher.

Minor support has developed at 1.3600 and beyond this at 1.3550-1.3530.  Major swing lows and support levels come in at 1.3450-1.3430.  A break below this indicates another leg down in the downtrend.

Despite the fact this range has sustained itself for some time now, range trading the EUR/USD is generally not a high probability trade due to its high propensity to trend.

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Cory Mitchell, CMT
~Know your risks when trading. Please read the Legal Disclaimer page.

The following is your weekly stock market outlook for March 8-12.  We will look at the S&P 500.

In last weeks analysis 1104 was the pivot point.  Holding above that was important in painting a picture in which the market could go higher.  At no point this past week was that point tested, and the result was a reaching (and exceeding) of the 1130 profit target.

The current upward trend which began back on Feb 5 is quite steep and a pullback is likely, yet with the relative close proximity to 52 week highs 1150 will likely be tested by the market.

Support now comes in at 1126-1124 followed by 1116-1112.  1105-1104 still has some relevance, but no longer a major level.  A drop below it though indicates weakness and a likely probe below 1100.  Support comes in further down at 1086 – but this is outside the average range for the market.

Average weekly range about 32 points.   The S&P closed out the week at 1138.70 and saw buying right into the close.

Little resistance hangs overhead, and a test of 1147-1151 is likely.  A move above this band indicates another wave higher and with clear skies minor resistance comes in at 1166 and 1180.  Multiple profit target approaches set out a target between 1180-1184 for the break.  This would be well beyond the average weekly range, so the 1166 target can be used for this week if we do see the market above 1150.

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Cory Mitchell, CMT

~Know your risks when trading. Please read the Legal Disclaimer page.

The following is your daily EUR/USD outlook for March 5, 2010.

The EUR pulled back today, and currently trades near the middle of the former range.  As mentioned in yesterday’s post on confirmation of the breakout, the pair needs to climb above the resistance now at 1.3740-1.3750 and then ultimately break the trendline at 1.3800 in order to confirm a larger correction.

At the moment, the pair remains choppy.  Longer term trend remains down, while we have higher lows and higher highs over the last few days.

I do not give much significance to support and resistance within this range.  Although some support has developed just above 1.3540, and is likely at 1.3520, 1.3490 and key support at 1.3440-1.3430.

Upside resistance, not significant, but likely at 1.3620-1.3640, 1.3700 and then the resistance level to add evidence to a further move higher – 1.3740

Non-Farm Payrolls out tomorrow could be the catalyst in moving this pair back into a trend, and will at minimum expand volatility.

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Cory Mitchell, CMT
~Know your risks when trading. Please read the Legal Disclaimer page.

If you have been following my analysis lately, you know there were some mixed signals in the market.  Adam lays out his thoughts in this new video, and poses a very credible case that maybe the Euro has gone to far.  Looking for some straight forward analysis?  It was recorded yesterday, but after today’s move is very relevant.

It’s only about 4 mins and is free to view.  Enjoy.

http://www.ino.com/info/531/CD3784/&dp=0&l=0&campaignid=3

Cheers,

Cory Mitchell, CMT

~Know your risks when trading. Please read the Legal Disclaimer page.