While the Euro is showing some recovery bounce off its recent lows, we have little doubt that the currency will be able to resume downside action in the wake of a flurry of US scheduled data later this morning. We suspect that the short covering bounce in the Euro simply sets the stage for a resumption of the downtrend pattern. Down trend channel resistance is seen up at 1.2559 but that resistance falls to 1.2536 on Wednesday. We would use down trend channel resistance lines as stop points for fresh short side plays in the Euro.
Technical Outlook: A crossover down in the daily stochastics is a bearish signal. Stochastics trending lower at midrange will tend to reinforce a move lower especially if support levels are taken out. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The upside daily closing price reversal gives the market a bullish tilt. It is a mildly bullish indicator that the market closed over the pivot swing number. The next downside target is now at 123.4450. The next area of resistance is around 124.8300 and
125.0450, while 1st support hits today at 124.0300 and below there at 123.4450.