The December Euro is down 32 ticks at 1.4812 this morning as I write. The enclosed chart shows that the long term up trend in the Euro is still intact. Over the past several days, the Euro has corrected right back to the 40 day exponential moving average before bouncing sharply yesterday. Just as in the case with the dollar index, the question now is whether yesterday’s price action was the beginning of the resumption of the long term trend. We shall see. I don’t recommend any new trades in the Euro at this time, but stay with the current trade position.

Followers of this letter should be long one December Euro (158.00 strike) call option from 32 ticks and short 2 December Euro (160.00 strike) call options from 20 ticks each for a combined credit of 8 ticks or $100 gross. Option expiration is in 35 days.

It is nice to know that if the Euro doesn’t reach our upside targets on the spread listed above, we will still make a gross profit of $100 on the trade, so any downward correction does not hurt us financially at all.

Oct. 30, 2009
David Hall