Eur/$, Time to Buy...

Eur/$ is chopping from last week's low/test of longer term support in the at 1.4620/30 area (both a 50% retracement from the June 2007 low at 1.3265 and base of the nearly 3 year bullish channel, see weekly chart/2nd below). Note too that the market broke temporarily below, before reversing back above, the bullish trendline since Dec, a positive “false break”(see daily chart below). With the market oversold after the last month of sharp declines, these recent bullish signs suggest at least a week or 2 of correcting higher and minimum 400 tick bounce may be ahead (and potentially more). In the Aug 18th email, said it was still too risky to buy as there were still no signs of even a near term bottom (at least at that point). Now, a number of those signs are evident, so would buy here (currently at 1.4770) for 1.5165, 1.5320/30 (50% retracement from the July high at 1.6035, previously broken bullish trendline since May), and possibly above (see longer term below). Initially stop on a close below the 1.4620/30 area as there is some near term risk for more basing, deep chopping. Support before there is seen at 1.4700 while nearby resistance is seen at 1.4905.

Longer term, the market is finding some support at the base of the 3 year bullish channel. Though there is some potential that a more important bottom is in place with gains all the way back to the July high at 1.6035 and even above, there are no signs that a bottom of that magnitude is in place (at least so far), and versus just a week or 2 of upside. However, given at least some near term upside favored (see shorter term above), would have a longer term bias above the base of the multi-year bullish channel.