Without having to report a blow by blow account of the Foreign currency prices, the established trend from this trading year of 2011 would be a clear Trend Following in the opening trading year of 2012. Until such time that both sides of the continent's economies as well as political situations would realistically improve. However, there are mix of signals for an improving US economy somehow, the uncertain of contagion is still in the air as major markets ripples its effects in the global arena.
With the ECB's balance sheet of over 2.73trn , the adverse price reaction of the EURUSD in itself has triggered a massive 200 pips move and a build-up of this momentum towards the end of the year's trading that rippled across the board of the forex market. Although, regardless of these events or a lack of one from a thinly traded market is still a signal that the bias negative and bearish sentiments are present in the market. True enough, easier said when prices has moved; but the overwhelmingly bearish Trend for the European majors and the continuing strength that the USD is making just proves that this would spill over towards the new trading weeks of the coming year 2012.
EURUSD DAILY
The psychological support of the EURUSD at 1.2880 seemingly looks weak with probable extensions at the 1.2560-1.2680 price levels. When these prices would be achieved would likely be towards the opening trading weeks ahead in January 2012. However, an orderly manner of depreciation would be seen with prices having a wider fluctuation on both directions. A word of caution should be exercised as the Euro prices heads lower; as a technical corrective divergence is being created and stay clear when such build-up of volumes and a lowering of open interest for the Euro futures may serve a temporary corrective price reversal due to position adjustments and year end book-squaring from a thinly traded market condition on the last trading day and opening week of January 2012. And this goes the same with the GBPUSD.
With that said, the correlation with the USDX currently at 80.63as of this writing; would have to go higher and hurdle the first resistance area of 81.38bp towards with its Elliot wave extension targets of 83.30 basis point. And continue just above that extension nearing the major monthly trend line resistance levels of 85.50 basis point on the high.
To date, it would be quite difficult to have projected time-line as to when these technical objectives & price levels can be achieve. This can only be speculated on by viewing the charts through the course of the coming weeks ahead together with the considerable fundamental conditions on both sides of the globe.
For now, Have a great New Year for 2012 and as always only the best for all your trades!
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