EUR/USD remains at the top of the 1.3280 range, leaving the dilemma over direction STILL unresolved. This move can be perceived as either a return to point of break out from the previous uptrend (see weekly chart on the next slide) or a break higher from a bull flag pattern. One is bearish the other bullish. 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). The market remains immediately bid above the 20 day ma at 1.3024. 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 rally has extended towards the 200 day moving average at 1.5937. The market has stalled here for now and has started to erode the accelerated uptrend. Both the daily RSI and Slow Stochastics indicators are turning lower and the risk of a further advance beyond the 200 day ma is diminished. We would allow for a slide back to 1.5730 (this weeks low) failure here is needed to negate the push higher and refocus attention back to 55 day ma at 1.5585. Above the 200 day ma would target 1.5967, the 78.6% retracement of the move down from November. Beyond here lies 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.
USD/CHF remains sidelined, it 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 has rallied to the 55 and 100 day ma at 77.17/32. The market has recently rebounded off the 76.00 support and is attempting to recover. Cloud resistance is also here at 77.26/43, beyond here will target 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, and await a weekly close above 77.15.
AUD/USD continues to inch slowly higher. The immediate risk is on the topside while prices are above the accelerated uptrend, today at 1.0727. The break higher has been pretty lacklustre, but 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 1.0727 will trigger a slide to 1.0546, a near term uptrend and then the 2 month uptrend at 1.0396. Failure here will negate the upmove.
EUR/JPY has rallied towards the key short term resistance at 102.55/60 (38.2% retracement of the move down from the October peak). Provided dips back from here are contained by the 20 day ma at 100.09, the market will remain well placed to break higher. Once this is cleared we will look for gains to the 200 day ma at 107.78. Support is located at initially 100.09 (20 day ma) ahead of 98.90 (61.8% retracement).
EUR/GBP has seen a strong rally higher through the 4 month down channel. In doing so it alleviates immediate bearish pressure and introduces scope for a deeper retracement to 0.8420/25, the December high and the 23.6% retracement of the move down from July 2011. This is key resistance – it is also the break down point from a previous uptrend. Only above here will imply short term reversal and introduce scope for a deeper retracement to 0.8550. Near term support lies at 0.8260 (the 78.6% retracement), ahead of the 0.8221 January low.
EasyForexNews Research Team