 | |  | | GAIN CAPITAL Strategy of the Day Thursday, January 26, 2006 7:51 AM EST
We were looking for US Dollar buying in yesterday's report based on the premise that everyone on the street was calling for a lower USD. When you have this kind of bearish sentiment combined with the powerful bullish chart patterns we identified yesterday, that is usually a short Dollar trader's recipe for disaster. And what a dollar rally it was.
Now, the outlook for the USD in the medium term should be still be lower, but the in the near term it has some upside left in the fuel tank that needs to be expended. We recently broke through some serious resistance levels such as the 200 EMA at 1.2160 in EURUSD that is calling for a retest of this level. Comparing retracement AB we see that .618 of AB equals the 200 EMA at 1.2150-60 area. A move lower to this level should be an explosive buying opportunity. |  |  |  |  |
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