$EURUSD after consolidation

• kevinmhughes
• January 9th, 2010

The $EURUSD has been consolidating since December 20, 2009, but more importantly, the $EUR has been weakening against the $USDX since 12/1/09.  The bear flag (or consolidation) will probably continue for the next couple of days (169 pip range) before a natural break out. [Daily Chart below]

(As I’m writing this post I’m listening to Steven Place on StockTwitsTV talk about the same thing I’m about to talk about)

The 1.4277 level has held as a strong support in the past (Sept & Dec 2008, June & Aug 2009).  With a breakdown below 1.4277 I see the next level for the $EURUSD to be 1.3925 which, of course, has held as great support/resistance levels all the way back to September 2008. Once the $EURUSD hits the 1.3925 level, I will close out 3/4 of my position and wait to see what it does with that level (it’ll probably consolidate).  If the level holds and the $EURUSD bounces back up, I will close the short and reverse into a long position back to the 1.4250 level.  On the other hand, if the 1.3925 level is given up, I will put back the 3/4 I took off and add an additional 1/2 position.

If the bear flag is broken completely and the $EURUSD runs to the upside (above 1.4446), the next level I see is 1.4730.  I will do the same thing on this move as I would have done on a downside move (just on the buy side).  If the 1.4730 level is broke, then I definitely see the 1.5032 being attacked again.

I’m a firm believer that the $USDX ($DX_F) will strengthen over the next several months into and through the summer.  If it does strengthen the way I see/say/hope, we will probably see the mid 1.20′s on the $EURUSD ($EUR weakening, $USDX strengthens) before a significant bounce back (if there is one at all).

There are several economic numbers that will be coming out this week and the calendar that I primarily use is through my FCM (or broker), GFT Forex and you can click here to view it.

This week I talked about the $EURUSD, next week I will talk about the $GBPUSD, all daily charts, with the following weeks talking about the major currency crosses and their levels with my thoughts on the moves they’ll be making.  I am not a swing trader in my business, I am in my IRA and these daily charts are where I get my signals for my IRA account.  My weekly posts will be for intra day levels (specific to each trading session).

Have a GREAT week!

Kevin M. Hughes is the President/Head Trader at K.M. Hughes & Associates, Inc., a currency trading firm, based in Charlotte, NC.  To find out more about his firm or him personally, visit www.hughesincorporated.com

Tickers: $EUR, $EURUSD, $USD, $USDX

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