Euro Remains Well Capped on Rallies to 20-Day SMA (Daily Classical)

Euro still well capped on rallies to 20-Day SMA. Dollar/Yen whipsaw price action takes us out of short trade at cost. Cable kisses 20-Day SMA and reverses sharply. Dollar/Swiss dips to be used as buy opportunities. Dollar/Cad consolidates ahead of fresh upside to 1.3020. Australian Dollar shows inside day price action. New Zealand Dollar well offered ahead of 0.5100.

[B]EUR/USD

[/B] EUR/USD – Has rallied quite impressively on Friday, but the market has run into formidable resistance by the 20-Day SMA to open the latest minor pullback. The market remains locked in a strong downtrend and has been unable to close above the 20-Day SMA for the entire 2009. Only a close above the 20-Day will ultimately delay the downtrend and suggest that we could be in the process of carving out a material base. Until then, we continue to recommend selling into rallies. Strategy: SIDELINED; AWAIT CLEARER SIGNAL.

                                                                                                                           [B]Level[/B]

                                                                       [B]Resistance[/B]

                                                                       [B]Details[/B]

                                                                                                                 1.2800

                                                                       R3

                                                                       Figure

                                                                                                                 1.2750

                                                                       R2

                                                                       3/6 high

                                                                                                                 1.2735

                                                                        R1 

                                                                       20-Day SMA

                                                                                                                 [B]Level[/B]

                                                                       [B]Support[/B]

                                                                       [B]Details[/B]

                                                                                                                 1.2530

                                                                       S1

                                                                       3/6 low

                                                                                                                 1.2480

                                                                       S2

                                                                       3/5 low

                                                                                                                 1.2420

                                                                       S3

                                                                       11/21 low

[B]USD/JPY

[/B] USD/JPY – The market is finally starting to roll, showing some good follow through from Thursday’s bearish outside day to 96.60 before bouncing sharply intraday. Nevertheless, daily studies show plenty of room for additional weakness, and a retest by the previous neckline resistance turned support at 94.60 could be seen over the coming days. Unfortunately, the violent intraday swings have taken us out of our short from Thursday after getting stopped at cost. Only back above 98.55 now shifts the focus back on the topside. Strategy: SHORT FROM 98.00 STOPPED AT COST; STAND ASIDE FOR NOW.

                                                                                                                           [B]Level[/B]

                                                                       [B]Resistance[/B]

                                                                       [B]Details[/B]

                                                                                                                 100.00

                                                                       R3

                                                                       Psychological

                                                                                                                 99.70

                                                                       R2

                                                                       3/5 high

                                                                                                                 98.55

                                                                        R1 

                                                                       3/6 high

                                                                                                                 [B]Level[/B]

                                                                       [B]Support[/B]

                                                                       [B]Details[/B]

                                                                                                                 96.85

                                                                       S1

                                                                       2/27 low

                                                                                                                 96.60

                                                                       S2

                                                                       3/6 low

                                                                                                                 96.35

                                                                       S3

                                                                       2/25 low

[B]GBP/USD

[/B] GBP/USD – The early bullish price action Friday has faded, with the market tracking back to daily opening levels into the close after kissing the 20-Day SMA by 1.4310 early on. The overall structure remains grossly bearish as the market trades in a very well defined bear channel and looks poised for additional declines back below the 1.3500 2009 and multi-year lows. In the interim, we will remain on the sidelines until a better opportunity presents itself. Strategy: SIDELINED; AWAIT CLEARER SIGNAL.

                                                                                                                           [B]Level[/B]

                                                                       [B]Resistance[/B]

                                                                       [B]Details[/B]

                                                                                                                 1.4610

                                                                       R3

                                                                       2/25 high

                                                                                                                 1.4420

                                                                       R2

                                                                       50-Day SMA

                                                                                                                 1.4315

                                                                        R1 

                                                                       3/2 high/20-Day

                                                                                                                 [B]Level[/B]

                                                                       [B]Support[/B]

                                                                       [B]Details[/B]

                                                                                                                 1.4035

                                                                       S1

                                                                       3/5 low

                                                                                                                 1.3960

                                                                       S2

                                                                       3/2 low

                                                                                                                 1.3930

                                                                       S3

                                                                       1/27 low

[B]USD/CHF

[/B] USD/CHF – Has pulled back sharply to suffer the most on the day, with the market reaching 1.1485 thus far. However, even in the face of the sharp reversal day, we would not recommend establishing short positions, with the major still confined to a very choppy multi-day range trade. Two Friday’s ago (20Feb) we saw an extremely bearish reversal day which took out the previous 11 day range, but ultimately, this led to nothing with the market merely bouncing back into the range thereafter. As such, our favored strategy is to buy on dips below 1.1500. Strategy: BUY @1.1465 FOR A 1.1850 OBJECTIVE, STOP @1.1290.

                                                                                                                           [B]Level[/B]

                                                                       [B]Resistance[/B]

                                                                       [B]Details[/B]

                                                                                                                 1.1850

                                                                       R3

                                                                       3/4 high

                                                                                                                 1.1810

                                                                       R2

                                                                       3/5 high

                                                                                                                 1.1720

                                                                        R1 

                                                                       3/6 high

                                                                                                                 [B]Level[/B]

                                                                       [B]Support[/B]

                                                                       [B]Details[/B]

                                                                                                                 1.1465

                                                                       S1

                                                                       2/20 low

                                                                                                                 1.1400

                                                                       S2

                                                                       2/3 lows

                                                                                                                 1.1315

                                                                       S3

                                                                       1/27 low

[B]USD/CAD

[/B] USD/CAD – Setbacks on Thursday were well supported ahead of 1.2700 and the bull move post the major triangle break remains firmly intact. Initially, a challenge and break above the 2008 highs at 1.3020 (28Oct high) is to be expected over the coming days with an eventual push back towards a measured move objective of 1.4000 over the coming weeks/months. In the interim, we will stay on the sidelines and look for opportunities to buy back into the trend on dips to the previous triangle resistance now turned support. Strategy: BUY @1.2600 FOR A 1.3020 OBJECTIVE, STOP @1.2480.

                                                                                                                           [B]Level[/B]

                                                                       [B]Resistance[/B]

                                                                       [B]Details[/B]

                                                                                                                 1.3020

                                                                       R3

                                                                       10/28 Trend High

                                                                                                                 1.3000

                                                                       R2

                                                                       Psychological 

                                                                                                                 1.2975

                                                                        R1 

                                                                       3/3 high

                                                                                                                 [B]Level[/B]

                                                                       [B]Support[/B]

                                                                       [B]Details[/B]

                                                                                                                 1.2715

                                                                       S1

                                                                       3/4 low

                                                                                                                 1.2675

                                                                       S2

                                                                       2/17 high

                                                                                                                 1.2600

                                                                       S3

                                                                       Old Triangle Top

[B]AUD/USD

[/B] AUD/USD – A sharp pullback on Thursday negates any positive price action earlier in the week with the market trading back with a heavy tone and adhering to the primary downtrend. Only a break back above 0.6555 would take the pressure off of the downside at this point and we look for a move back towards the recent range lows by 0.6285 into the early week. Nevertheless, trade remains extremely choppy and establishing any form of a position is not recommended. Strategy: SIDELINED; AWAIT CLEARER SIGNAL.

                                                                                                                           [B]Level[/B]

                                                                       [B]Resistance[/B]

                                                                       [B]Details[/B]

                                                                                                                 0.6645

                                                                       R3

                                                                       2/13 high

                                                                                                                 0.6555

                                                                       R2

                                                                       2/25 high

                                                                                                                 0.6530

                                                                        R1 

                                                                       3/4 high

                                                                                                                 [B]Level[/B]

                                                                       [B]Support[/B]

                                                                       [B]Details[/B]

                                                                                                                 0.6340

                                                                       S1

                                                                       2/27 low

                                                                                                                 0.6285

                                                                       S2

                                                                       3/3 low

                                                                                                                 0.6250

                                                                       S3

                                                                       2/2 low

[B]NZD/USD

[/B] NZD/USD – The overriding bear trend remains intact with any rebounds showing little to no follow through. The market has failed to materially extend gains after Wednesday’s strong bullish outside day to once again put the focus back on the downside, exposing a retest and break of the multi-year trend lows from Wednesday at 1.4895. Below 1.4895 opens a more significant drop back towards the August 2002 lows in the 0.4500 area. Only back above 0.5195 delays. Strategy: SIDELINED; AWAIT CLEARER SIGNAL.

                                                                                                                           [B]Level[/B]

                                                                       [B]Resistance[/B]

                                                                       [B]Details[/B]

                                                                                                                 0.5195

                                                                       R3

                                                                       2/25 high

                                                                                                                 0.5130

                                                                       R2

                                                                       2/26 high

                                                                                                                 0.5095

                                                                        R1 

                                                                       3/6 high

                                                                                                                 [B]Level[/B]

                                                                       [B]Support[/B]

                                                                       [B]Details[/B]

                                                                                                                 0.4965

                                                                       S1

                                                                       3/5 low

                                                                                                                 0.4895

                                                                       S2

                                                                       3/4 Trend Low

                                                                                                                 0.4820

                                                                       S3

                                                                       Major 78.6% Fib

Written by Joel Kruger, Technical Currency Analyst for DailyFX.com
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