Let’s call a spade a spade….

We are seeing the EURUSD rotate back to the upside in what continues to be holiday like markets. The EURUSDs pretty aggresive move to the downside in the NY session today happened while Gold rallied higher. Data today was mixed with weak housing and consumer confidence but strong Richmond Fed Manufacturing. Oil prices are up (dollar negative usuallly). The Dow is flattish (+10). Let’s call a spade a spade…the market is in holiday mode. So when the market seems intent to trend one way, it will trend until it stops and goes the other way.  Such is how we deal with it.

So the ambiguous fundamental story seems to have the market more focused on the technical picture, which started to change for the EURUSD from bullish to bearish when the 50% retracement of the December high to low range, held resistance at 1.3276. From there the bearish bias intraday saw the price move through the 1.3201 high from Dec 21 (1 in the chart above)  which contained the pairs upside until the first few hours of trading today. The next level to breach was the 1.3180-85 (2 in chart above), then the 200 hour MA and 100 hour MA at the 1.3160 and 1.3137 (3 and 4). The low was finally set at 1.3093 (5 above)  for no real apparent reason except, the shorts had enough and started to buy back.

Now the price is back up looking to test the 100 hour MA at the 1.3137 level again and it would not surprise me if a move above is attempted in the NY afternoon trade. If broken, a move back up to the 200 hour MA at the 1.3160 may not be far behind.

On the first look, however, look for day traders to try selling against the key level with risk limited and the hope that a move back down will materialize.

The NY Midday Forex Commentary for December 28th 2010

EURUSD tests next target after breaking 100 hour MA

The channel trend was broken yesterday and forced the EURUSD higher. Today, the price is back down testing that old trendline at 1.3103. I find that this old trendline has a tendency to be a borderline that buyers (in this case) can lean against.

Resistance above now comes in a the 100 hour MA (blue line in the chart above) at the 1.3137 level. There should be sellers against this level. A move above negates some of the bearish bias for the pair.

EURUSD finds support at the 100 hour MA

The EURUSD fell back down in NY trade but found support against the 100 hour MA. The ability to stop the downside fall, gives profit takers a level to lean against with a break likely leading to lower levels. The 1.3180-85 becomes upside resistance once again for the pair.

Richmond Fed Index Much Higher as Consumer Confidence Falls

Consumer Confidence:    Survey: 56.3     Actual: 52.5       Prior: 54.1     Revised: 54.3

Dec Vs. Nov Totals:
Age
Under 35:    74.7 vs. 73.8
35-54:   53.4 vs. 55.7
55:   45.5 vs. 45.7

Richmond Fed Manufacturing Index:      Survey: 11     Actual:  25      Prior: 9

Business Activity: Dec vs. Nov
Overall Index: 25 vs 9
Shipments: 30 vs 7
New Order Volume: 29 vs 10
Order Backlog: 14 vs -3
Capacity Utilization: 21 vs 9
Vendor Lead Time: 17 vs 6
Number of Employees: 14 vs 10
Average Workweek: 15 vs 9
Wages: 16 vs 8

Consumer Confidence & Richmond Fed Manufacturing Index Due at 10AM

The NY Morning Forex Commentary for Dec 28th

The dollar finds profit taking strength in NY trading. Technicals turn bearish as well.

US S&P/CaseShiller Moves Lower

S&P/CaseShiller Home Price Index:      Actual: 145.32    Prior: 147.49     Revised: 147.27

S&P/CS 20 City MoM% SA:     Survey: -0.60%    Actual: -.99    Prior: -0.80%     Revised: -.96

S&P/CS Composite- 20 YoY:     Survey: -0.20%    Actual: -.80     Prior: 0.59%     Revised: .44