Monday, September 10, 2012

With Friday's upthrust, the futures vaulted a formidable external peak at 1.2759, raising some vexatious questions about the euro's fate. Although the weight of technical evidence has grown considerably more bullish with last week's rally, it beggars belief to think that the euro is about to supplant the U.S. dollar, for  more than a short while, as an ostensible safe haven for cash.  At best, with the recent  open commitment by the ECB to buy sovereign debt in whatever quantities are necessary to hold rates down, the euro should be merely hold its own against the dollar.  That's why I expect the former to go sideways once this short-squeeze subsides in perhaps a week or two.  Until then, we have a 1.2885 rally target that we can use, or perhaps 1.2898 if any higher. Basis the December contract, those targets lie, respectively, at either 1.2888 or 1.2902.

A 1766.90 target is in play at the moment, but let me stretch the bullish imagination a bit with a larger pattern that projects to 1801.30.  The pattern seems not very compelling because the point 'B' low is only slightly higher than 'A'. However, even a single tick's difference qualifies the uptrend as such, and so we should have no qualms about using it predictively. Accordingly, the decisive move through the 1668.40 midpoint is evidence that bulls are likely to achieve their/our objective. With the supply of external peaks on the daily chart exhausted, traders will have to be nimble to get aboard, but I'd suggest using a 'timed buy-stop' on the 15-minute chart or less following a b-c pullback on the chart shown. I've sketched this hypothetically for your further guidance. _______ UPDATE (September 14, 3:10 a.m.):  The steep trajectory of the rally has brought our 1801.30 target within easy distance more quickly than we might have imagined.   The target itself is sufficiently compelling that even a small overshoot of perhaps $1.00 to $1.50 would be evidence of unspent buying power eager to play out next week.

A 1470.00 target easily discernible on the daily chart continues to serve as a bullish lodestone, but notice that there's a Hidden Pivot resistance of higher degree just above it, at 1480.50, on the weekly chart.  The larger pattern is clear and compelling, suggesting there will be double stopping power within the 10-point range shown.  Until it is reached our bias should be bullish, but don't expect much in the way of camouflage buying opportunities, since the rally is in uncharted territory. We'll look to short aggressively -- via camouflage -- if and when the futures get within pitching-wedge distance of our targets.