The euro hit a two-month high above $1.36 on Friday and its break of important technical levels suggested more gains to come now that anxiety about a euro zone debt crisis has started to wane.
The euro has outperformed the dollar in eight of the last 10 sessions, and Friday’s breach of $1.3570 took it above the 50 percent retracement of its November-to-January slide. It was last up 1 percent at $1.3615
Currency speculators turned long on the euro for the first time in two months in the latest week while they doubled bets against the U.S. dollar, data from the Commodity Futures Trading Commission showed on Friday.
The value of the dollar’s net short position rose to $15.06 billion in the week ended Jan. 18, from a net short position of $7.38 billion the previous week, according to Reuters and CFTC calculations.
Trading Setups / Chart in Focus:
On Friday the EURUSD broke higher and closed above key technical resistance levels. We can see in the daily chart that an inside bar setup formed on Thursday just above old resistance / new support at 1.3400, this inside bar broke higher on Friday and price closed near the week’s high. Resistance comes in near 1.3750.
The 4hr chart formed a solid pin bar setup showing rejection of 1.3400, this price action setup broke higher on Friday; we discussed this setup in our member’s commentary before it came off.
4 HR CHART:
For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my forex trading training website.
On Wall Street Friday the Dow and S&P 500 rose as General Electric Co’s earnings put a positive tone on the economic recovery, ending a two-day losing streak for the benchmark index.
The Nasdaq was tugged lower by Google, ending a week that was marked by investors pulling back from recently outperforming technology stocks.
The Dow added 49.04 points, or 0.41 percent, the S&P 500 gained 3.09 points, or 0.24 percent, and the Nasdaq lost 14.75 points, or 0.55 percent.
Upcoming important economic announcements: 1/23/2011
7:30pm EST: Australia – PPI q/q
7:30pm EST: Australia – CPI q/q
Tentative: Japan – Monetary Policy Statement
Tentative: Japan – Overnight Call Rate