Speaking last week with regard to Australian Dollar resistance at 0.9500, we noted that “the more often a resistance tested, the likelier it is to break down.” We suggested going long on another retracement above 0.9287, marked by the 61.8% of the 02/28-03/20 decline. This support was made even stronger by the upward-sloping trend line that has held since August of last year, making a bullish reversal here likely. Price action validated our assertions as AUDUSD dipped to trigger entry and then mounted a bullish run to take out resistance at 0.95.
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EUR/USD
Strategy: Bearish below 1.5560, Targeting 1.5287[/B]
Last week, we were of the opinion that the relief rally in EURUSD would end and the downtrend resume below 1.5560, a level where the 23.6% Fibonacci retracement of the 02/07-03/17 rally and the 38.2% retracement of the recent 04/22-05/08 decline coincide. As it stands, the EURUSD is little changed. The pair began falling as we suggested but substantial bearish momentum failed to materialize. A false upside break peaked above resistance only to collapse into the recent range again. Our bias remains bearish below 1.5560 with an initial target the May low at 1.5287.
For more resources on the EURUSD, please visit the DailyFX Euro Currency Room.
[B]GBP/USD
Strategy: Bearish below 1.9760, Targeting 1.9400[/B]
Last week we noted that price action has been confined to a downward-sloping channel since mid-March and that the most recent decline stalled at the lower boundary of this channel. Most recent trading has seen GBPUSD has been largely motionless between this and the 76.4% Fibonacci retracement of the 02/20-03/13 rally at 1.9605. We continue to prefer a scenario wherein GBPUSD pulls up to the 61.8% Fib just below 1.9760. Should sings of a reversal appear, we will short here. In an alternative scenario, GBPUSD may rally all the way to the channel top at 1.9811 before a run lower toward 1.9400.
For more resources on the GBPUSD, please visit the DailyFX British Pound Currency Room.
[B]USD/JPY
Strategy: Bullish against 102.90, Targeting 105.19[/B]
Last week we noted that USDJPY pair broke past the upward-sloping trend line that had guided price action since mid-March to settle at the 32.8% Fibonacci retracement of the 12/27/07-03/17 decline above 102.90. We saw this as a retracement rather than a violation of the overall bullish bias. We suggested the pair pull back to test the 50% Fib below 105.20. This assessment proved correct and our profit target was hit. Subsequently, USDJPY pulled back once again and looks poised to test downside resistance above 102.90. We will employ the same approach as last week, looking to by near support with the bullish trend.
For more resources on the USDJPY, please visit the DailyFX Japanese Yen Currency Room.
[B]USD/CHF
Strategy: Bullish against 1.0389, Targeting 1.0624[/B]
Last week we reckoned USDCHF would find support at the 50% Fib of the 02/13-03/17 decline at 1.0375 and suggested a long position to target topside resistance below 1.0550. The up move materialized as expected, coming close to 1.0550 and causing us to take profit. This week, we take broader view for our Fibonacci setup, looking at the 12/27/07-03/17 down leg. We see prices ranging as USDCHF digests the preceding rally between the 38.2% and 50% Fib levels. We will look for an entry above support, with an initial target near 1.0624.
For more resources on the USDCHF, please visit the DailyFX Swiss Franc Currency Room.
[B]
USD/CAD
Strategy: Flat, waiting for confirmation[/B]
Last week we advocated to long USDCAD at a test of the multi-month support above 1.0009, the 61.8% Fibonacci retracement of the 02/20-02/28 decline. Our assumption that recent range trading would continue missed the mark as USDCAD broke decisively lower and has currently stalled above the 38.2% Fib at 0.9895. A break beyond this level would herald a major bearish reversal for USDCAD. We will remain on the sidelines for the moment as we wait for price action to signal where we are headed next.
For more resources on the USDCAD, please visit the DailyFX Canadian Dollar Currency Room.
[B]AUD/USD
Strategy: Bullish against 0.9287, Target TBA[/B]
Speaking last week with regard to AUDUSD resistance at 0.9500, we noted that “the more often a resistance tested, the likelier it is to break down.” We suggested going long on another retracement to 0.9287, marked by the 61.8% of the 02/28-03/20 decline. This support was made even stronger by the upward-sloping trend line that has held since August of last year, making a bullish reversal here likely. Price action validated our assertions as AUDUSD dipped to trigger entry and then mounted a bullish run to take out resistance at 0.95. We will continue to hold the trade as the rally develops. With the pair trading at levels unseen since 1984, we must rely on Fibonacci extensions to guide our thinking, eying an initial target at the 123.6% level at 0.9625. We will not make this a “hard” take profit order however as we don’t want to cut short profits from a potentially momentous move. Rather, we will monitor prices carefully and let the market show signs of slowing momentum before closing out.
For more resources on the AUDUSD, please visit the DailyFX Australian Dollar Currency Room.
[B]NZD/USD
Strategy: Bearish against 0.7940, Target TBA[/B]
We initially reckoned two weeks ago that NZDUSD would retrace losses to re-test trend line support-turned-resistance near 0.7940. We looked to enter short from there as the bearish trend resumes. The pair followed through as expected – a high wick tipped the trend line before NZDUSD collapsed lower. Last week, price action stalled above the 0.7612, the 38.2% Fibonacci retracement of the 08/17/07-02/27 rally. We noted to expect some consolidation here and opted to hold off from taking profit, thinking downside momentum would resume in short order. The Fib level proved to act as support as expected. We now see a downward sloping channel guiding the bearish trend. We will continue to hold the trade, as we expect NZDUSD to retrace to the channel top near 0.7820 prior do further decline. For those traders that did not enter short with us initially, this will offer a good entry point to initiate a sell trade.
For more resources on the NZDUSD, please visit the DailyFX New Zealand Dollar Currency Room.
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To contact Ilya regarding this or other articles he has authored, please email him at <[email protected]>.[/I]