09/09/09 7:59 am - EURUSD: Another upleg without downside probing, near key Fibo resistance.

We’re now looking at two uplegs that started without any serious probing of the downside, which is either a sign of a complete dollar breakdown (which I don’t think is happening at this point of record credit contraction) or a sign for a sharp EURUSD reversal to come soon (more likely). But until we see signs of that, the uptrend has to be respected, but it sure has the characteristics of being overdone and getting ahead of itself. 1.4620 is strong resistance (the 62.8% Fibo retracement of the 1.2328-1.6037 range, and we are likely to see some stalling there given the lack of consolidation since Friday. Yesterday’s 90+ RSI levels will probably not be exceeded today and we are likely to see a bearish failure swing on the RSI chart.

Having missed the break of 1.44 and not given a good enough entry to go long afterward, I prefer to remain sidelined until the steam of this first rally runs out. Will then consider a short near 1.4620 for a short-term trade, or look for a long near the daily EMA10 or 1.44. Fibo projection calls for a move to 1.4665 however, and a stop on a short near 1.4620 should leave enough room for a move to this level.

Gold is staying just below $1000 this morning, making the sustainability of its break above this key psychological resistance questionable. Stocks are in positive territory after opening slightly negative, but buying interest appears to be subdued here as well. None of the markets (equities and commodities) are “taking off” and even though the dollar is approaching key support, I think it’s too early to give up on it and declare a breakdown. Sidelined and watching closely.

Support: 1.4565 Sppt   1.4446 H-8-6   1.4375 Key Sppt/Rsst

Resistance: 1.4620 DFibo62   1.4665 FiboProj   1.4718 H-12-18-08

RSI: Hrly: bullish, Dly: neutral to bullish

Hourly Chart: