With momentum turning down (the 5-day moving average crossing below the 40-day moving average) against the background of a negative Elliott Wave cycle analysis, we establish an initial short EUR-USD position in medium size. Our initial multi-week target is 1.35 but long term we anticipate sub 1.20. Fixed stop traders should establish an initial stop at 1.4500 and variable stop traders (our preferred methodology) should use the 5- and 40-day moving average cross (ie stop out when the 5-day crosses back up through the 40-day).
HSBC Global Research