Euro, Cable and Greenback – Update

Per the post on 04.05.06, the key support level of 12200-12300 failed to hold on the stronger-than-expected US NFP data on Friday.  Note that the cable failed to confirm the inverse head-and-shoulders bottoming pattern breakout in the Euro, a warning sign.  With both contracts back below key levels and the US dollar index above 8900, these patterns are on hold at the moment.  The Euro and Pound gaps from 04.04.06 are now filled potenially aleviating the downside pressure.  At a minimum, the Euro and Pound must produce daily closes above 12285 and 17545 respectively to re-establish the upward momentum.

Showtime – the following took place between 0800 and 0900 ET

The US NFP report came in stronger than consensus and the markets are currently digesting the news.  The Euro, basis the Jun contract (ECM6), set a 12228 day session low, within 23 ticks of the real gap from 04.04 and into the key support zone.  The cable traded to 17508 (17491 on the Globex contract) while the US Dollar index continues to consolidate around 8900.  The stage is set – stay tuned!

Euro and Cable – Status Quo – The following took place between 0700 and 0800 ET

The Bank of England and ECB both held the line on interest rates and the weak longs baled out producing lows of 12253 and 17510 respectively for the Euro and Pound futures.  Per yesterday posts, both currencies are probing support.  Now it’s time to see what the Big Boys read into Mr. Trichet’s comments. Stay tuned.

US Greenback – Update

I forgot to mention earlier the fact that similar patterns exists for the Japanese Yen (JYM6) and the Canadian Dollar (a topping pattern), loonie, (CDM6).  For the Yen, a close above 8765 sets begins the up pattern with a close above 8800 confirming the move with an objective of 9200-9300.  For the loonie, a close below 8400 (8350 for conservative traders) confirms a top with a potential targets of 7750-7950.  Note that these levels are for the currencies, not the spot forex – therefore they are inverse.  Stay tuned!

EuroCurrency and US Greenback – Reversal Time?

The Euro is potentially completing a 10+ month inverse, head-and-shoulders bottom (see the chart below).  Key support is now at 12200-1 2300, basis the Jun 2006 front-month contract (ECM6).  This level must hold now on pullbacks (note the 12205-12282 real gap from the Apr 03-04 day session), possibly occuring on the Bank of England and ECB meeting results due out tomorrow morning at 0700 and 0745 ET as well as the US non-fam payrolls (NFP) report due out at 0830 ET Friday.  A daily close above 12400 will confirm the pattern with an upside target of 12700-12900.

Note that the same pattern is apparent on the US dollar index (DXC) – though obviously a topping pattern.  A close below 8775 will confirm at least a short-term top for the Greenback.

Also keep an eye on the British Pound or cable (BPM6).  A close above 17620 is the first signal for its inverse head-and-shoulders bottoming pattern with a close above 17840 confirming the bottom.  The upside target is 18400-18600, basis the June contract.

Digital Power – DPW – More Upside

Digital Power DPW is moving once again, up almost 14% today to $2.39, another new two-year high.  As this is written near midday, volume is nearly 4 times the 3 months average daily volume.  Realize that this is a very thinly traded stock with only 60,000+ shares crossing the tape so far.

Per the prior post, it looks like a $2.70-31.10 test is in the cards. Keep this one on your board!