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S-T Euro Failure Re-exposes L-T Bull; Sterling Next?

Posted 03/06/2018 8:00AM CT | RJO Market Insights

MAR EURO
The market’s recovery this morning above our 1.2372 short-term risk parameter discussed in 28-Feb’s Technical Blog clearly identifies 01-Mar’s 1.2166 low as the END of the decline from 16-Feb’s 1.2580 high. But given the prospect that this 1.2166 low also ended a broader 3-wave and thus corrective structure from 25-Jan’s 1.2577 high we’ll elaborate on below, we believe the market is poised to resume the secular uptrend to new highs above 1.2580.

From a shorter-term perspective today’s continued rally leaves yesterday’s 1.2279 low in its wake as the latest smaller-degree corrective low this market is now minimally required to fail below to threaten a more immediate bullish count. Per such this 1.2279 low is considered our new short-term risk parameter from which non-bearish decisions like short-covers and resumed bullish punts can be objectively based and managed.
euro_mar18_240min_chart
euro_daily_chart
Only a glance at the weekly log active-continuation chart below is needed to see that the 15-month uptrend remains as the dominant technical factor. Against this bullish backdrop the sell-off attempt from 25-Jan’s 1.2577 high is easily seen as a 3-wave and thus corrective affair as labeled in the daily log chart above. This relapse stopped a mere 20 pips from the (1.2185) 38.2% retrace of Nov-Jan’s 1.1578 – 1.2577-portion of the secular bull and above huge former 1.2100-area resistance-turned-support. If correct, this count calls for a resumption of the 15-month bull to at least one more (5th-Wave) round of new highs above 1.2580 and in a trendy, impulsive manner straight away.

In sum, traders are advised to return to a bullish policy ahead of further and possibly accelerated gains straight away. Setback attempts to former 1.2370-area resistance-turned-support are advised to approached as corrective buying opportunities with minimum weakness below 1.2279 required to defer or threaten this call enough to warrant defensive measures.

euro_weekly_chart

MAR BRITISH POUND
While the market hasn’t yet recouped our short-term risk parameter defined by 26-Feb’s 1.4082 corrective high detailed in the 240-min chart below, the developing recovery the past few days, the market’s failure to sustain recent losses below 1.3868-area support-turned-resistance and the bullish developments discussed above in the Euro are enough to conclude 01-Mar’s 1.3719 low as one of developing importance and a tight but objective risk parameter from which non-bearish decisions like short-covers and cautious bullish punts can now be objectively based and managed.
pound_mar18_240min_chart
pound_daily_chart
From a long-term perspective the technical setup in the sterling is virtually identical to that detailed above in the Euro. The long-term trend remains arguably up with the Jan/Feb’s sell-off attempt stalling pretty much exactly around key former resistance from Sep’17’s 1.3695-area that, since broken in early-Jan, is considered a key new support candidate.

These issues considered, traders are advised to move to a cautious bullish policy from current 1.3910-area prices ahead of further and possibly sharp, trendy gains to eventual new highs above 1.4370. A failure below 1.3719 is required to negate this call and resurrect a broader peak/reversal-threat environment.

pound_weekly_chart

RJO Market Insights

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