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The Euro has been unaffected against the US dollar by the recent slide in financial markets. In fact, it’s strengthened. We look at a chart of the US dollar/euro to see where it’s heading over the short and medium term. We also look at Top 40 stock Steinhoff International Holdings, which conducts a large part of its business in Europe. Steinhoff has a lower price target in place over the short term. Meanwhile, the US dollar/euro is heading into important price resistance, which may halt its recent rally.
US DOLLAR/EURO – RESISTANCE
Trend: Short and medium term up (for euro). Long term sideways to up.
Strategy: Sell at line 2.
* The US$/euro has bounced back well since its mid-2010 woes and is now edging up close to its long-term resistance line (line 2) at the 143,30 level (spot price). Line 1 is current support.
* However, the daily stochastic oscillator (on top) is giving a negative divergence: ie, is making a lower high (unlike the price itself), which is warning of a drop to come.
* Traders holding the US$/euro should look at selling once it gets to line 2 (143,30).
* An eventual breakdown and close below line 1 will be a sell short signal for the euro. (Line 1 was at 139,70 on 28 March and rising at an angle of 0,20/day therefore: eg, to 139,90, 140,10, etc).
* But until it does break down below line 1 expect it to reach line 2. An eventual breakdown below line 1 will set up a drop to 134 to 135 at least.
* For shorting on a close below line 1, the stop will be a close above line 2 (143,30).
STEINHOFF – Quite VULNERABLE
Trend: Short term down. Medium term sideways. Long term up.
Strategy: Sell short on a bounce to line 1.
* Steinhoff has broken down below line 1 of a rising wedge (with line 2). It’s now pointing to a lower target of 2185c (minimum target), which is measured as the height of the wedge projected down. At the time of writing it was at 2350c.
* The short-term stochastic is giving a positive divergence from its oversold region, which is warning of a rally. The question is whether it will reach its downside target first before that rally.
* Meanwhile, if it bounces to lines 1 and 3 resistance (before reaching the target) traders sell it short on that bounce. Lines 1 and 3 were at the 2500c to 2520c level respectively on 28 March).
* Take profits at the 2185c minimum target. Note: It can continue a bit further down thereafter to its 200-day moving average at 2158c.
* Place your initial stop-loss as a close above line 3 (ie, above 2525c).
Please note: For more recommendations and charts by the author on shares, stock indices and commodities please go to www.themarket.co.za.
US DOLLAR/EURO – RESISTANCE
Trend: Short and medium term up (for euro). Long term sideways to up.
Strategy: Sell at line 2.
* The US$/euro has bounced back well since its mid-2010 woes and is now edging up close to its long-term resistance line (line 2) at the 143,30 level (spot price). Line 1 is current support.
* However, the daily stochastic oscillator (on top) is giving a negative divergence: ie, is making a lower high (unlike the price itself), which is warning of a drop to come.
* Traders holding the US$/euro should look at selling once it gets to line 2 (143,30).
* An eventual breakdown and close below line 1 will be a sell short signal for the euro. (Line 1 was at 139,70 on 28 March and rising at an angle of 0,20/day therefore: eg, to 139,90, 140,10, etc).
* But until it does break down below line 1 expect it to reach line 2. An eventual breakdown below line 1 will set up a drop to 134 to 135 at least.
* For shorting on a close below line 1, the stop will be a close above line 2 (143,30).
STEINHOFF – Quite VULNERABLE
Trend: Short term down. Medium term sideways. Long term up.
Strategy: Sell short on a bounce to line 1.
* Steinhoff has broken down below line 1 of a rising wedge (with line 2). It’s now pointing to a lower target of 2185c (minimum target), which is measured as the height of the wedge projected down. At the time of writing it was at 2350c.
* The short-term stochastic is giving a positive divergence from its oversold region, which is warning of a rally. The question is whether it will reach its downside target first before that rally.
* Meanwhile, if it bounces to lines 1 and 3 resistance (before reaching the target) traders sell it short on that bounce. Lines 1 and 3 were at the 2500c to 2520c level respectively on 28 March).
* Take profits at the 2185c minimum target. Note: It can continue a bit further down thereafter to its 200-day moving average at 2158c.
* Place your initial stop-loss as a close above line 3 (ie, above 2525c).
Please note: For more recommendations and charts by the author on shares, stock indices and commodities please go to www.themarket.co.za.
