The December Euro recovered from earlier weakness overnight to reach a level not seen in three weeks. Despite the bearish news earlier in the trading session that Slovakia rejected the bailout expansion plan that sent the Euro lower, traders shifted gears and decided that talk of speeding up the bank recapitalization process was going to be a bigger story. Once again the rally in the Euro proved that Greece isn’t the issue. Instead investors are voting with their trading accounts that restoring confidence in the European financial system is the main event.
The shift in investor sentiment this morning reaffirmed that last week’s lows in the major currencies may become major bottoms. In addition, several of the markets are changing their main trends to up on the daily chart. With the currency futures markets turning short-term bullish, several are now within striking distance of major retracement zone.
Daily December British Pound Swing Chart
The December British Pound turned its main trend to up on the daily chart with a drive through the last swing top at 1.5706. The chart now indicates the market is poised to retrace the break from 1.6586 to 1.5179. This target zone is 1.5951 to 1.6101.
Daily December Canadian Dollar Swing Chart
Technically, the December Canadian Dollar is still in a down trend on the swing chart, but its short-term rally has been impressive. The current rally has regained 50% of the break from 1.0204 to .9367 at .9786. The next upside target is the 61.8% level at .9884. A full retracement of the break from 1.0593 to .9367 will take the market back to .9980 to 1.0125.
Daily December Euro Swing Chart
The main trend turned up on the daily December Euro chart overnight with the breakout over the last swing top at 1.3684. The size of this move has put the Euro within striking position of the major break from 1.4558 to 1.3142. An acceleration through the 50% price at 1.3850 will set up the market for a further rally to the 61.8% level at 1.4017.
Daily December Swiss Franc Swing Chart
The strength in the Euro has also spread to the December Swiss Franc. Following last week’s bullish closing price reversal bottom, this contract is set up for a change in trend to up on a breakout over the swing top at 1.1235. Based on the short-term range of 1.2985 to 1.0749, traders should watch for a potential rally into the retracement zone at 1.1867 to 1.2131.
