Euro can’t manage a close above the 20-Day SMA; bearish. Dollar/Yen pullback risk increasing. Cable reverses sharply; eyes 1.4055-95. Dollar/Swiss locked mid-range. Dollar/Cad reversal day puts us back on breakout watch. Australian Dollar recovery prospects fading. New Zealand Dollar contemplating fresh trend lows.
[B]EUR/USD
[/B] [B]EUR/USD –[/B] The market continues to consolidate above the recent range lows by 1.2515 with a higher platform now forming by 1.2660. Price action has been quite choppy and no clear short-term directional bias can be established at current levels. It is however worth noting that the pair has been unable to close above the 20-Day SMA since January 2, and multiple attempts to do so over the past few days have failed. Key level to watch above and below remain 1.2995 and 1.2660. [B]Strategy: SIDELINED; AWAIT CLEARER SIGNAL.[/B]
[B]Level[/B]
[B]Resistance[/B]
[B]Details[/B]
1.3095
R3
2/9 high
1.2995
R2
2/12/13 highs
1.2905
R1
2/25 high
[B]Level[/B]
[B]Support[/B]
[B]Details[/B]
1.2660
S1
2/24 high
1.2555
S2
2/20 low
1.2515
S3
2/18 low
[B]USD/JPY
[/B] [B]USD/JPY –[/B] The break of the double bottom neckline by 94.60 now projects eventual gains back above 100.00 and towards the 104.00 area. However, we continue to warn against the shorter-term likelihood for a pullback, as more often than not, once these necklines are triggered, the price usually reverses course before resuming the direction of the pattern breakout. The daily RSI is also now above the 70 level for the first time since June 2007, warning of a potential reversal. Look for a break back below 96.35 to confirm. Above 96.35 keeps the upside momentum intact and exposes next resistance by 98.85, the 50% retrace off of the 110.70-87.15 move. [B]Strategy: SIDELINED; AWAIT CLEARER SIGNAL. (We had issues a sell this morning at 98.20 but do not expect this to trigger. The recommendation expires on the NY close). [/B]
[B]Level[/B]
[B]Resistance[/B]
[B]Details[/B]
98.85
R3
50% Retrace
98.20
R2
11/13 high
98.00
R1
Figure
[B]Level[/B]
[B]Support[/B]
[B]Details[/B]
96.35
S1
2/25 low
94.95
S2
2/23 high
94.25
S3
2/23 low
[B]GBP/USD
[/B] [B]GBP/USD –[/B]The pair is rolling back over after the latest rally attempts stalled out by the 61.8% fib off of the 1.4990-1.4095 move, and failed to close back above the key 50-Day SMA. Look for setbacks to continue into Thursday with an acceleration expected on a break back below 1.4095 (18Feb low) to expose the critical trend lows by 1.3500. Only back above 1.4665 will negate. [B]Strategy: SIDELINED; AWAIT CLEARER SIGNAL.[/B]
[B]Level[/B]
[B]Resistance[/B]
[B]Details[/B]
1.4665
R3
2/23 high
1.4510
R2
50-Day SMA
1.4375
R1
2/24 low
[B]Level[/B]
[B]Support[/B]
[B]Details[/B]
1.4150
S1
2/20 low
1.4095
S2
2/18 low
1.4055
S3
2/2 low
[B]USD/CHF
[/B] [B]USD/CHF – [/B]Remains locked in a violent multi-day sideways chop with price action largely confined to the 1.1465-1.1890 area. Last Friday’s extremely bearish reversal day has shown no follow through, with the market bouncing back into the mid-range. The overall structure however remains bullish and we expect dips to continue to be well supported ahead of an eventual break to challenge the key 2008 highs at 1.2300. [B]Strategy: SIDELINED; AWAIT CLEARER SIGNAL.[/B]
[B]Level[/B]
[B]Resistance[/B]
[B]Details[/B]
1.1890
R3
2/20 high
1.1800
R2
2/19 high
1.1715
R1
2/24 high
[B]Level[/B]
[B]Support[/B]
[B]Details[/B]
1.1535
S1
2/24 low
1.1465
S2
2/20/23 lows
1.1400
S3
2/3 low
[B]USD/CAD
[/B] [B]USD/CAD –[/B] We have seen an ongoing contraction in volatility to the point where we have reached the apex of a very prominent triangle that has defined trade since late October. Falling triangle resistance comes in at 1.2645 and we will be looking for a daily close above the latter to confirm a breakout which will trigger a fresh upside extension exposing a direct retest of the 1.3020 October 28 trend highs. Ultimately, the upside break should project gains back towards 1.4005 (2004 Highs) over the coming months (measured move objective based off of widest point of triangle). Wednesday’s bullish reversal day puts us back on breakout alert. [B]Strategy: SIDELINED; AWAIT CLEARER SIGNAL.[/B]
[B]Level[/B]
[B]Resistance[/B]
[B]Details[/B]
1.2765
R3
1/21 high
1.2645
R2
Triangle Top
1.2615
R1
2/25 high
[B]Level[/B]
[B]Support[/B]
[B]Details[/B]
1.2355
S1
2/23 low
1.2280
S2
2/13 low
1.2130
S3
2/9 low
[B]AUD/USD
[/B] [B]AUD/USD –[/B] Hopes for a recovery following the latest bounce out from 0.6335 (18Feb low) are fading, with the market now seemingly content on consolidating. This does not bode well for bulls and once again exposes the recent range lows by 0.6335. Nevertheless, it is too difficult to establish a clear directional bias and we remain sidelined. Key levels to watch over the coming sessions come in by 0.6555 and 0.6385. [B]Strategy: SIDELINED; AWAIT CLEARER SIGNAL.[/B]
[B]Level[/B]
[B]Resistance[/B]
[B]Details[/B]
0.6735
R3
1/28 high
0.6645
R2
2/13 high
0.6555
R1
2/25 high
[B]Level[/B]
[B]Support[/B]
[B]Details[/B]
0.6385
S1
2/24 low
0.6355
S2
2/20 low
0.6335
S3
2/18 low
[B]NZD/USD
[/B] [B]NZD/USD –[/B] Friday’s bullish close has done little to generate any significant upside follow through with the market locked for now in a bearish consolidation over the 0.4960 (2Feb low) trend lows. The overall structure remains grossly bearish and a retest of the latter is favored over the coming days with an acceleration expected on a break towards 0.4500 by the August 2002 lows. However, with daily studies closer to oversold, selling at current levels is not compelling and we remain comfortably sidelined. Back above 0.5210 negates. [B]Strategy: SIDELINED; AWAIT CLEARER SIGNAL.[/B]
[B]Level[/B]
[B]Resistance[/B]
[B]Details[/B]
0.5450
R3
2/9 high
0.5320
R2
2/12 high
0.5210
R1
2/17 high
[B]Level[/B]
[B]Support[/B]
[B]Details[/B]
0.5050
S1
2/24 low
0.5010
S2
2/20 low
0.4960
S3
2/2 low
[B]Written by Joel Kruger, Technical Currency Analyst for DailyFX.com
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