[B]STERLING/SWISS DIPS TO BE USED TO BUILD LONG POSITIONS [/B]
[B]Techs – [/B]The market has been trending higher since basing by the historic 1.5125 lows back in late December (29Dec low). We have already seen one confirmed higher low by 1.5650 (21Jan low) after the price rallied to fresh multi day highs by 1.7490 (10Feb high), and a fresh higher low is now sought out above 1.5650 ahead of the next bounce and bull trend resumption. The cross has been pulling back over the past several days in search of this higher low and looks to be eying a major confluence of technical support. A closer look at the chart below shows a combination of a [B]rising trend-line, 50-Day SMA, Lower Bollinger, 61.8% fib retracement, and ATR projected low[/B], all coming in within pips of one another. As such, we will use this highly compelling confluence as an entry level for fresh longs if tested today. Stops will be placed below the 50% fib retrace of the entire move, which comes in by 1.6300. [B]Strategy: BUY @ 1.6365 FOR A 1.7040 OBJECTIVE, STOP @1.6190. [I]Stops to be trailed to cost on a break back above 1.6500. Trade recommendation to be removed if not triggered by NY close (5pm EST) on Thursday.
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[B]Fundamental Catalyst –[/B] Data and news out of the UK overnight has been less than encouraging following the weaker [B]Nationwide house prices[/B] and disclosure of [B]RBS losses[/B] which were the largest corporate losses in UK history. That being said, both events can easily be discounted, as the Nationwide was only one release of many, while the RBS losses were hardly that shocking considering the state of the global economy and financial sector. Data out of the UK has on the whole over the past several weeks exceeded expectations and points to a potential bottoming in the economy. Additionally, the UK government is expected to unveil further details to its [B]UK bank rescue plan [/B]today, which should helped to find some renewed optimism after investors were skeptical with the initial vagueness of the plan. Meanwhile in Switzerland, we continue to see deterioration within the local economy, which has accelerated of late, as fears escalate over the soundness and safety of the local banking system. This has detracted from the flight to safety lure of the Swissy, with this familiar correlation starting to break down. While we can not say that SNB intervention is imminent, there has been plenty of talk amongst the locals about such intervention.
[B]Written by Joel Kruger, Technical Currency Analyst for DailyFX.com
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