EUR/USD is right at the top of the 1.3280 range, this represents a return to point of break out from the previous uptrend (see weekly chart on the next slide). However the move yesterday looks directional and that the market appears to be breaking higher from a bull flag pattern. Both of which imply further strength. Indicators are positive and a follow through move above 1.3280 will trigger further strength to 1.3436 and even 1.3627 (the 50 and 61.8% retracements). Yet still the dilemma over whether this is a return to point of break out or a bull flag remains unresolved. The market remains immediately bid above the 20 day ma at 1.2995. only back below here alleviates immediate upside pressure for a slide 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 has eroded the 1.5888 November high and this has introduced further scope to the 1.5940/200 day ma and then 1.5967, the 78.6% retracement of the move down from November. There is scope for 1.6167/71 (the October high and the 200 week ma). But this is the maximum topside that we expect to see for this move. While above 1.5792 immediate upside pressure is maintained, a slide back below 1.5730 (this weeks low) is needed to negate the push higher and refocus attention back to 55 day ma at 1.5579.
USD/CHF has not maintained a foothold above resistance at .9250 and is weighing on the downside – support at 0.9080/66 is exposed, the November low and the 50% retracement of the move up from October. Failure at .9080/66 will trigger a slide to .8960, the 61.8% retracement and introduce potential to 0.8785. Clearly the market will need to sustain a foothold over .9244/50 (mid December low) to initiate another upside attempt. Above here allows for recovery to the .9317/45 (October high and the 55 day ma) then .9595 recent high.
USD/JPY rebound off the 76.00 support continues and has eroded the previous trendline at 76.89 – in doing so it restores upside pressure. We look for recovery towards 77.16/33 (55 and 100 day ma) and then the more important 78.12/29 band (the December highs and 200 day ma). Only below 76.00 will leave the market on the defensive and place attention back on 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. Longer term we have seen the market trade through its 4 year downtrend, but what we have not seen is a weekly close above it. A weekly close above 77.10 (ie Friday close) will achieve this.
AUD/USD has eroded the 1.0750/65 highs seen in September and October 2011. The immediate risk is on the topside while prices are above the accelerated uptrend, today at 1.0700. The break higher has been pretty lacklustre and not confirmed by its daily RSI. For now we will go with it, but would keep stops relatively tight. The break has introduced scope to 1.1080, the July 2011 high. Our core scenario is that the market will struggle to regain 1.10. Below 1.07 will trigger a slide to 1.0529, a near term uptrend and then the 2 month uptrend at 1.0383. Failure here will negate the upmove.
EUR/JPY the rebound from interim support at 99.00/98.90 (23rd January low and 61.8% retracement) has eroded the 55 day ma and in doing so pushes our attention near term back to the overhead resistance. Initial resistance at 102.21, the January high has been eroded and the market is in new highs for the year. Key short term resistance remains 102.55/60 resistance (38.2% retracement of the move down from the October peak). Once this is cleared we will look for gains to the 200 day ma at 107.87. Support is located at initially 99.86 (20 day ma) ahead of 98.90 (61.8% retracement).
EUR/GBP has seen a rebound from 0.8260 (the 78.6% retracement), and while this may lead to a retest of the 4 month down channel at 0.8358, we continue to look for rallies to remain curbed there. The market has recently failed at the 0.8421 end of December high, and the 55 day ma at .8392 – which is regarded as negative. Below 0.8260 we look for losses to extend to the 0.8221 January low and longer term the .8067/2010 low.
EasyForexNews Research Team