Forex commentary EUR/USD January 2, 2012
Happy New Year to all.
I sincerely hope everyone had great holiday season with family and friends.
I know this is the time that we should all be reflecting on the past year and make predictions for the coming year however I am not going to do that. To be honest I dont have the stomach for the dire straits the world is facing. I can only look back and hope that governments have the wherewithal to do whats needed to get us back on solid footing. I am choosing to be optimistic at this point because the alternative is just to bleak to start a new year. I found it best summed up in a quote in this article from Charles Biderman of Trim Tabs.
” Until there is a total restructuring of developed market economies to the point where entrepreneurs are encouraged to act and where government spending is ‘closer’ to government income and not to ‘wish fulfillment’, there can be no jump-start to growth. Political will remains bereft of desire to do anything but kick the can down the road – and unfortunately, that can is getting bigger and heavier by the minute.” Enough said I think.
Now lets get on to my short term outlook for the EUR/USD. At this juncture the daily chart is what I will be looking at closely. It has tested the yearly lows from January 2011 at 1.2873 and been rejected in thin volume over the holidays. I expect this to be tested again the first week of the year and possibly break for a run to test the next level. Mainly because it has already tested the break out level at 1.2982 from the bottom and been rejected there. The wild card here is that this price movement was done over the holidays and the jury is still out on what the big boys think. If we do have some New Year optimism jump in we will most likely see a run up to test the descending trend line. However I am not holding too much hope for a trend change.
Looking at it intraday trading the Asian market I will be looking for the small stop run above or below the short term S/R and keeping my mind open for longer term direction. Tokyo banks are closed Monday the 2nd so I will be open for a longer move but not expecting one. I would be happy with 50-60 pips on the first trading day of the year. Things will liven up when London opens so I will have to asses that using the pionts mentioned on the daily chart.
Take care and lets all have a prosperous new year.