EUR/USD while we remain biased towards failure at 1.3245/50, the 38.2% retracement of the move down from November, chart action at this juncture is not at all clear. The erosion of the near term uptrend has provoked NO follow through and we could even argue that there is a potential ‘bull flag’ developing. Critical to the chart will be the price action at 1.3250 – above here will keep the market on an upwards tack towards 1.3436 and even 1.3627 (the 50 and 61.8% retracements). However keeps alive our core view that the correction terminated at 1.3250. We suspect loss of 1.3000 should be enough to upset the bulls enough for losses to 1.2854/40 then 1.2530/88, the August 2010 low and the 78.6% retracement of the move from 2010-2011.
GBP/USD rally through the 61.8% resistance at 1.5810 implies further scope to the 1.5957/200 day ma and possibly 1.6167/91 (the October high and the 200 week ma. This is the maximum topside that we expect to see for this move. Very near term the market has stalled at the November high at 1.5888 and this is its initial resistance.
Initial support lies at 1.5640/35 and while above here we will assume a near term upside bias is preserved. Below here would trigger losses to the 55 day ma at 1.5570 and then the base of the recent range
USD/JPY has eroded the key Fibonacci retracement at 76.20. This leaves the market on the defensive and re-focuses attention back to the 75.31 low and potentially 75.00/74.90 (psychological support and point and figure target from 60 minute chart). We note that we have an old time zone gap back to 75.94 and this would provide its initial target.
There is some divergence on the 240 minute chart, however while this may provoke some near term consolidation, the market will remain directly offered below 76.55. Rallies would need to regain this level as a minimum in order to recover towards the 77.17/36 55 and 100 day ma.
USD/CHF the lacklustre break of its short term down trend is not inspiring and we remain unable to rule out a slide to 0.9080/66, the November low and the 50% retracement of the move up from October. The market has not managed to clear even initial resistance and looks likely to consolidate further. Clearly the market will need to sustain a foothold over the first resistance level at .9244/50 (mid December low). Above here allows for recovery to the .9340/45 then .9595 recent high. Failure at .9080/66 will trigger a slide to .8960, the 50% retracement.. Today’s trade: Assume long 0.9195, stops .9110, target .9595.
AUD/USD is probing the 1.0750/65 highs seen in September and October 2011, these are expected to hold and provoke failure. We look for the upside to remain relatively limited, however need a break below the 1.0329 2 month uptrend to alleviate upside pressure. Initial support is found at 1.0460, a near term uptrend and the 200 day ma at 1.0406. Below the 2 month uptrend at 1.032999 will alleviate upside pressure and initiate a move lower. This would then target 1.0046/00 en route to .9818 and .9664/80.
Resistance at 1.0765 is regarded as the last defence for 1.1080, the July 2011 high
EUR/GBP our outlook is bearish. The market has recently eroded its one month uptrend and failed at the 0.8421 end of December high, and the 55 day ma at .8413 – all of which are negative. Please note that we regard this recent rally as a ‘return to point of break down’ from its previous uptrend (this offers resistance at .8418 (see weekly chart on next slide) – this is bearish price action. We have minor support at 0.8288/80, the low from 23rd January and beyond here look for losses to extend to the 0.8221 January low and longer term the .8067/2010 low.
EUR/JPY has seen a rebound just ahead of interim support at 99.00/98.90 (23rd January low and 61.8% retracement) and while this may prompt some consolidation, we continue to favour the downside. The market has recently see failure ahead of the 102.55/60 resistance (38,2% retracement of the move down from the October peak), which implies the market is likely to have topped short term. Below 98.90 will refocus attention on to the 97.04 January low. Our slightly longer term targets are nearer to 95.00.
EasyForexNews Research Team