EUR/USD has charted a ‘Doji’ at 1.3184, this marks indecision just ahead of our corrective target of 1.3200/50, and suggests to us that the correction higher that has been in place since the 16th January is likely to be over. We are unable to rule out a move to the 1.3245/50 zone (38.2% retracement of the move down from October) but consider this to be less likely now. The market will need to break below 1.3025 to alleviate upside pressure. Below 1.3025 will target the 1.2878/54 zone – the 20 day ma and then 1.2530/88, the August 2010 low and the 78.6% retracement of the move from 2010-2011. We view near term strength as corrective only and our longer term bias is bearish – our longer term target is 1.2083/the 200 month ma.
GBP/USD has started to erode the 5 month down trend while we would allow for further gains to the 1.5770/80 November and December highs, this is not the most dynamic move we have seen and we will require a weekly close above this downtrend at 1.5681 to confirm the break. The market stays bid above the 1.5618 accelerated uptrend, failure here would question the break higher and trigger a slide back to 1.5535. The market faces tough resistance at the 1.5760/80 November 2011 high and 1.5810 Fibo and we are alert to failure here. Above here would introduce scope to the 200 day ma at 1.5972.
USD/CHF has eroded the .9250/02 support band (38.2% retracement of the move from October) and is on the defensive. Some caution is warranted however, the market has significant divergence of intraday oscillators which is warning us of a correction higher and yesterdays price action was a doji. While capped by 0.9260, we would allow for losses to .9080/66 (the November low), which will ideally hold. The market will stay offered intraday while capped by .0.9260/9340. Only above here would alleviate downside risk and allow for recovery to the .9595 recent high.
USD/JPY has reacted sharply lower and there is scope for a slide back to key support, which remains the 76.72/20 uptrend and Fibonacci support. While this holds our bullish bias remains. The market has failed on its initial test to overcome 78.24/33 and sold off (December highs and the 200 day ma) and we view price action as consolidation.
We are positive, the market has recently eroded the 4 year downtrend, above the 200 day ma targets the 55 week ma at 79.49. This together with the 80.00/25 pivot is extremely tough resistance and is expected to take several attempts to break.
EUR/GBP has rallied to the 0.8395/38.2% retracement of the move down from November, between here and the 0.8421 end of December high, we would ideally like to see failure. The generally ‘wedge like’ chart pattern developing is negative and we maintain our bearish bias. A close below 0.8315 is needed to complete the wedge. We continue to favour failure, the market has recently registered a weekly close below the 0.8285 2011 low and targets the 0.8067/2010 low and then 0.7750 (long term Fibo). The close below 0.8285 level has seen these downside targets engage. The .8421 end of December high is key resistance and only above here would signal a deeper retracement to the 0.8498 (the 61.8% retracement of the move down from the end of November peak.
AUD/USD has maintained upside pressure and looks set to challenge the 1.0750/65 highs seen in September and October, these are expected to hold and provoke failure. We look for the upside to remain relatively limited, however will need to break below the 1.0275 2 month uptrend to alleviate upside pressure. Initial support is found at 1.0390, a near term uptrend and the 200 day ma at 1.0408. Below the 2 month uptrend at 1.0275 will alleviate upside pressure and initiate a move lower. This would then target 1.0046/00 en route to .9818 and .9664/80.
EUR/JPY is showing signs of failure ahead of the 102.55/60 resistance. This is the 38.2% retracement of the move down from October 2011 high and the December 2011 high. We suspect that this will hold the topside on the initial test and provoke some profit taking. The market will need to regain this level to add weight to the idea that the market has based from a longer term perspective. Interim support lies at 100.58 (near term uptrend) ahead of 98.90, only failure here will refocus attention on to the 97.04 January low.
EasyForexNews Research Team