Year end bull market for the European currency?

Various form of analysis seem to point to this direction, especially if its price will remain above the important support at 1.2860. Latest move has found resistance at 1.310. Consequently, a swing above 1.3185 is now necessary to target 1.33, eventually 1.35.

The long pattern consolidation, that began in May, appears to have ended mid November with the decisive move above the resistance at 1.29. The slope of the 50/100/200 day moving averages are strongly pointing upward giving more substance to latest move. Furthermore, the second part of the year is not seasonally favourable to the US dollar.

Euro is currently discounting a 25 basis point hike by the European Central Bank on December 7th. Recent comments by European officials have marked the need to control inflation and keep the economy in track for further growth.

It would be interesting to see how this move will develop over the medium/long term. In fact, latest economic developments have decreased the possibilities for some changes, in either direction, in the monetary policy in the US.

Economic data has been encouraging in the past weeks. The November National Association of Homebuilders survey has shown a surprise rise to 33 from 30. Retails sales rose 0.3% excluding autos and gasoline. Empire State and Philadelphia Fed surveys showed stronger than expected gains.

Silver seems to follow up this potential fall of the US dollar. The double bottom formation that began in June 06 is completed. Major moving average indicators (50/100/200 days) are slopping upward. Seasonal patterns support an increase of silver prices in December. As a result, latest move above the resistance at 1.280 on the March futures contract could anticipate higher prices in the near future. The objective could be 1.440, provide its price will not slip back below 1.300.

Gold must move above recent highs at 645 to target 660. Seasonality does support higher prices in December. Consequently, a close below 622 on the March futures contract will mark the end of this increase of gold prices and target 620, eventually 600.

Angelo Airaghi (November 28th 2006) Profits On


THE DATA CONTAINED HEREIN IS BELIEVED TO BE DRAWN FROM RELIABLE SOURCES BUT CANNOT BE GUARANTEED, NEITHER THE INFORMATION PRESENTED NOR ANY OPINIONS EXPRESSED CONSTITUTE A SOLICITATION OF THE PURCHASE OF SALE OF ANY FUTURES OR COMMODITY PRODUCT. THOSE INDIVIDUALS ACTING ON THIS INFORMATION ARE RESPONSIBLE FOR THEIR OWN ACTIONS. FUTURES AND COMMODITY TRADING MAY NOT BE SUITABLE FOR ALL RECIPIENTS OF THIS REPORT. THE RISK OF LOSS IN TRADING FUTURES AND OPTIONS CAN BE SUBSTANTIAL. EACH INVESTOR MUST CONSIDER WHETHER THIS IS A SUITABLE INVESTMENT. ALL RECOMMENDATIONS ARE SUBJECT TO CHANGE AT ANY TIME. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.