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A very interesting picture for USDJPY at the moment with the possibility of both a bullish triangle pattern and a bearish flag pattern currently on the table. Yesterday we highlighted an ascending triangle pattern on the hourly chart with a target at 88.15 which looks to have been activated by the move up through 87.22; but having assessed the subsequent price action, it looks more accurately like this was in fact a symmetrical triangle. The consequences of this shift in definition is a mere 5 pips (the target now 88.20), so our view of the topside prospects remain unaltered;resistance is seen around 88.00 (i.e. might use discretion on taking profit a little earlier than the pattern’s defined target), and further supply remains at 89.15 (12 Jul high) and 89.50 (28-29 Jun high).
What is intriguing however about the current picture is that there is also the possibility of a bearish flag coming into play in the coming sessions, and which currently suggests a break below 86.95 (lower edge of the flag) would be a good trigger for short entry –implying a target of 84.20 below. This bearish scenario does tie in nicely with the recent break of 86.97 (1 Jul low) which opened up the possibility of another plunge towards Nov 2009 lows of 84.83; but once again we should remain cautious that such a bearish target would almost certainly catch the attention of the BoJ in which case intervention may be a very real and ruthless threat.
A very interesting picture for USDJPY at the moment with the possibility of both a bullish triangle pattern and a bearish flag pattern currently on the table. Yesterday we highlighted an ascending triangle pattern on the hourly chart with a target at 88.15 which looks to have been activated by the move up through 87.22; but having assessed the subsequent price action, it looks more accurately like this was in fact a symmetrical triangle. The consequences of this shift in definition is a mere 5 pips (the target now 88.20), so our view of the topside prospects remain unaltered;resistance is seen around 88.00 (i.e. might use discretion on taking profit a little earlier than the pattern’s defined target), and further supply remains at 89.15 (12 Jul high) and 89.50 (28-29 Jun high).
What is intriguing however about the current picture is that there is also the possibility of a bearish flag coming into play in the coming sessions, and which currently suggests a break below 86.95 (lower edge of the flag) would be a good trigger for short entry –implying a target of 84.20 below. This bearish scenario does tie in nicely with the recent break of 86.97 (1 Jul low) which opened up the possibility of another plunge towards Nov 2009 lows of 84.83; but once again we should remain cautious that such a bearish target would almost certainly catch the attention of the BoJ in which case intervention may be a very real and ruthless threat.
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Just as we suspected in yesterday’s report, the brief visit above 1.3000 (1.3028 the high) soon attracted the attention of bears who re-emerged in numbers and drove the pair all the way back down to lows of 1.2839.
We feel that at these lofty levels, a short bias seems the most attractive in terms of risk-reward (recall that the rally to 1.3028 represented a 9.5% appreciation in the space of just 6 weeks), and significant resistance level appear to cap the upside to 1.3095-1.3125. That zone of anticipated selling interest includes the triple whammy of 10 May high (1.3095), the 4-week uptrend channel resistance at 1.3115, and also the 38.2% fibonacci retracement of the entire sell-off from 1.5145 to 1.1876 which comes in at 1.3125.
The tricky part here is selecting favourable entry levels and a small enough position size to tolerate a wide stop; 1.2950 would be the ideal area for us to re-load longs, with the view that the pair should at the very least re-visit the lower edge of this 4-week uptrend channel in the coming days (currently seen at 1.2745). We still expect some buyers to lie around 1.2780 (a former pivot) and 1.2683 (last Wednesday’s low).
Just as we suspected in yesterday’s report, the brief visit above 1.3000 (1.3028 the high) soon attracted the attention of bears who re-emerged in numbers and drove the pair all the way back down to lows of 1.2839.
We feel that at these lofty levels, a short bias seems the most attractive in terms of risk-reward (recall that the rally to 1.3028 represented a 9.5% appreciation in the space of just 6 weeks), and significant resistance level appear to cap the upside to 1.3095-1.3125. That zone of anticipated selling interest includes the triple whammy of 10 May high (1.3095), the 4-week uptrend channel resistance at 1.3115, and also the 38.2% fibonacci retracement of the entire sell-off from 1.5145 to 1.1876 which comes in at 1.3125.
The tricky part here is selecting favourable entry levels and a small enough position size to tolerate a wide stop; 1.2950 would be the ideal area for us to re-load shorts, with the view that the pair should at the very least re-visit the lower edge of this 4-week uptrend channel in the coming days (currently seen at 1.2745). We still expect some buyers to lie around 1.2780 (a former pivot) and 1.2683 (last Wednesday’s low).
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The 3-week downtrend channel continues to direct price action in the short term, but thus far the bears have not managed to muster a decent attempt at breaking below 1.0400 despite a couple of attempts late last week.
We think that current levels (1.0530) actually look pretty attractive for short entry given the previous price action around 1.0550-60 is now bolstered by downtrend resistance at 1.0535. We’d be satisfied using 1.0580 as our stop, and set a first target on the downside of 1.0450 (yesterday’s low), with 1.0400 (double bottom seen last week) as a possible extended target.
Some bulls may favour buying on the dips towards, 1.0400, but should they be wrong the landscape below 1.0400 is only dotted with stale support levels at 1.0365, 1.0315 (trendline support), then 1.0230 –could be a nasty plunge with few buyers to slow the descent.
The 3-week downtrend channel continues to direct price action in the short term, but thus far the bears have not managed to muster a decent attempt at breaking below 1.0400 despite a couple of attempts late last week.
We think that current levels (1.0530) actually look pretty attractive for short entry given the previous price action around 1.0550-60 is now bolstered by downtrend resistance at 1.0535. We’d be satisfied using 1.0580 as our stop, and set a first target on the downside of 1.0450 (yesterday’s low), with 1.0400 (double bottom seen last week) as a possible extended target.
Some bulls may favour buying on the dips towards, 1.0400, but should they be wrong the landscape below 1.0400 is only dotted with stale support levels at 1.0365, 1.0315 (trendline support), then 1.0230 –could be a nasty plunge with few buyers to slow the descent.
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A 1-week downtrend channel appears to be the main driver of GBPUSD so far this week, but the pair still hasn’t posed a serious threat to the significant support down at 1.5230. Indeed, as mentioned yesterday, we have been using that 1.5230 level as a pivot to buy off and after picking up some cheap GBPUSD late yesterday afternoon we have managed to scalp 50-60 pips of upside this morning. With the 1-week downtrend now imposing its effect even lower down today (trendline resistance 1.5305) we won’t attempt to go long again just yet –at least until the price action is able negate that downtrend and make the risk-reward profile more attractive.
Once the bulls can break above that downtrend we’d be more confident of a continued rally to targets around 1.5350 (yesterday’s high), 1.5472 (last Thursday’s high), and 1.5525 (15 Apr high).
Should the downtrend actually outlast the support at 1.5230, we would be willing to flip to a shortbias andexpect next supports at the 1.5080 former neckline, 100-day moving average 1.4989, then the 12 Jul low 1.4949.
A 1-week downtrend channel appears to be the main driver of GBPUSD so far this week, but the pair still hasn’t posed a serious threat to the significant support down at 1.5230. Indeed, as mentioned yesterday, we have been using that 1.5230 level as a pivot to buy off and after picking up some cheap GBPUSD late yesterday afternoon we have managed to scalp 50-60 pips of upside this morning. With the 1-week downtrend now imposing its effect even lower down today (trendline resistance 1.5305) we won’t attempt to go long again just yet –at least until the price action is able negate that downtrend and make the risk-reward profile more attractive.
Once the bulls can break above that downtrend we’d be more confident of a continued rally to targets around 1.5350 (yesterday’s high), 1.5472 (last Thursday’s high), and 1.5525 (15 Apr high).
Should the downtrend actually outlast the support at 1.5230, we would be willing to flip to a shortbias andexpect next supports at the 1.5080 former neckline, 100-day moving average 1.4989, then the 12 Jul low 1.4949.
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USDJPY has managed to consolidate for the last 24 hours despite the recent break of major support at 86.97 (1 Jul low) which has opened up the possibility of another plunge back towards the November 2009 low of 84.83.
The potential bearish pennant we highlighted on the hourly chart yesterday failed to activate (so no position entered), and indeed the move back above 86.97 has negated the possibility of that pattern playing out later on. Instead, we now see the possibility of an ascending triangle in play which would become active on a break above 87.22 and which would look to target 88.15.
We are slightly wary that resistance may come into play around 88.00 so will have to use discretion on perhaps taking profit a little earlier than the pattern’s defined target. Further supply remains at 89.15 (12 Jul high) and 89.50 (28-29 Jun high).
USDJPY has managed to consolidate for the last 24 hours despite the recent break of major support at 86.97 (1 Jul low) which has opened up the possibility of another plunge back towards the November 2009 low of 84.83.
The potential bearish pennant we highlighted on the hourly chart yesterday failed to activate (so no position entered), and indeed the move back above 86.97 has negated the possibility of that pattern playing out later on. Instead, we now see the possibility of an ascending triangle in play which would become active on a break above 87.22 and which would look to target 88.15.
We are slightly wary that resistance may come into play around 88.00 so will have to use discretion on perhaps taking profit a little earlier than the pattern’s defined target. Further supply remains at 89.15 (12 Jul high) and 89.50 (28-29 Jun high).
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EURUSD
The rally continues for EURUSD, with today’s surge clocking up a high of 1.3028. Over the last few sessions our focus has predominantly been on the hourly chart (and the 4-week uptrend channel that has guided up from 1.2150), but today it is worth taking a look at the bigger picture revealed by the daily chart as it appears we may be approaching a significant juncture where the bears may start to exert their force once more.
Since touching the lows of 1.1876 back on 7 Jun, EURUSD has taken a mere 6 weeks to rally over 9.5% (!), but a formidable resistance zone is now on the horizon which would prompt us to start getting short and selling on any rallies towards 1.3050 (we may not even get to see that level though so our preference is to scale into the position gradually above 1.3000). For one thing, the 4-week uptrend channel resistance we’ve been monitoring on the hourly chart now comes in at 1.3080, and is backed up by a significant former high at 1.3095 (seen on 10 May). The added information the daily chart can give us is that at 1.3125 there is also the 38.2% fibonacci retracement of the entire sell-off from 1.5145 to 1.1876 which should present a major hurdle for this relief rally to overcome.
We still expect some buyers to lie around 1.2905 (100-day moving average), 1.2871 (yesterday’s low), 1.2780 (a former pivot), and 1.2683 (last Wednesday’s low).
EURUSD
The rally continues for EURUSD, with today’s surge clocking up a high of 1.3028. Over the last few sessions our focus has predominantly been on the hourly chart (and the 4-week uptrend channel that has guided up from 1.2150), but today it is worth taking a look at the bigger picture revealed by the daily chart as it appears we may be approaching a significant juncture where the bears may start to exert their force once more.
Since touching the lows of 1.1876 back on 7 Jun, EURUSD has taken a mere 6 weeks to rally over 9.5% (!), but a formidable resistance zone is now on the horizon which would prompt us to start getting short and selling on any rallies towards 1.3050 (we may not even get to see that level though so our preference is to scale into the position gradually above 1.3000). For one thing, the 4-week uptrend channel resistance we’ve been monitoring on the hourly chart now comes in at 1.3080, and is backed up by a significant former high at 1.3095 (seen on 10 May). The added information the daily chart can give us is that at 1.3125 there is also the 38.2% fibonacci retracement of the entire sell-off from 1.5145 to 1.1876 which should present a major hurdle for this relief rally to overcome.
We still expect some buyers to lie around 1.2905 (100-day moving average), 1.2871 (yesterday’s low), 1.2780 (a former pivot), and 1.2683 (last Wednesday’s low).
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EURUSD
EURUSD continues to work its way higher within a 3-4 week uptrend channel, and just as we had forecast last week, the daily break above the 100-day moving average eventually led to another visit to major 1.3000 resistance (high 1.3007).
Also in line with our predictions, the bulls have had to pause for breath on the first lunge at these lofty levels, a hiatus that has allowed the pair to drift back down to an intraday low of 1.2871. Should the bullish momentum resume, the levels to watch above remain at 1.3000, 1.3035 (uptrend channel resistance) and 1.3093 (10 May high). We however still feel that current levels are a bit rich to entice us back into longs, especially considering the shooting star pattern seen on the daily chart on Friday which suggests a reversal is possible. Instead, we look for a deeper correction back towards 1.2800 before we step back in.
Nearest supports are seen at 1.2911 (100-day moving average), 1.2871 (today’s low), 1.2780 (a former pivot), and 1.2683 (last Wednesday’s low).
EURUSD continues to work its way higher within a 3-4 week uptrend channel, and just as we had forecast last week, the daily break above the 100-day moving average eventually led to another visit to major 1.3000 resistance (high 1.3007).
Also in line with our predictions, the bulls have had to pause for breath on the first lunge at these lofty levels, a hiatus that has allowed the pair to drift back down to an intraday low of 1.2871. Should the bullish momentum resume, the levels to watch above remain at 1.3000, 1.3035 (uptrend channel resistance) and 1.3093 (10 May high). We however still feel that current levels are a bit rich to entice us back into longs, especially considering the shooting star pattern seen on the daily chart on Friday which suggests a reversal is possible. Instead, we look for a deeper correction back towards 1.2800 before we step back in.
Nearest supports are seen at 1.2911 (100-day moving average), 1.2871 (today’s low), 1.2780 (a former pivot), and 1.2683 (last Wednesday’s low).
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USDJPY
USDJPY is still in the grip of a powerful bearish trend, and that selling pressure has now seen major support at 86.97 (1 Jul low) overwhelmed into submission, opening up the possibility of another plunge back towards the November 2009 low of 84.83 in the coming days.
On the hourly chart, we see a potential bearish pennant pattern in play which would suggest going short on a break below 86.55, and aiming for a target of 85.60. Strong selling interest is likely to precipitate back up towards 86.97 so a sensible stop level seems to be just above 87.00.
Even a feisty short squeeze higher is unlikely to have the gumption to overcome the supply left lurking around 88.00, 89.15 (12 Jul high), and 89.50 (28-29 Jun high). As such, the risk-reward profile strongly favours short positions, although we assert one cautionary note that despite the downside being by far the path of least resistance, the BoJ could be waiting in the wings to prevent an all-out USDJPY collapse –and if they do step in to sell JPY, don’t expect a gentle ride back higher.
USDJPY is still in the grip of a powerful bearish trend, and that selling pressure has now seen major support at 86.97 (1 Jul low) overwhelmed into submission, opening up the possibility of another plunge back towards the November 2009 low of 84.83 in the coming days.
On the hourly chart, we see a potential bearish pennant pattern in play which would suggest going short on a break below 86.55, and aiming for a target of 85.60. Strong selling interest is likely to precipitate back up towards 86.97 so a sensible stop level seems to be just above 87.00.
Even a feisty short squeeze higher is unlikely to have the gumption to overcome the supply left lurking around 88.00, 89.15 (12 Jul high), and 89.50 (28-29 Jun high). As such, the risk-reward profile strongly favours short positions, although we assert one cautionary note that despite the downside being by far the path of least resistance, the BoJ could be waiting in the wings to prevent an all-out USDJPY collapse –and if they do step in to sell JPY, don’t expect a gentle ride back higher.
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GBPUSD
GBPUSD’s soaring rally has finally started to show some signs of easing up, but despite the break through some recent uptrend supports, the pair still looks comfortably buoyed above 1.5230.
We now treat that 1.5230 level as a pivot for our trading strategy, looking to buy on dips below 1.5250, but willing to flip to a short position should we happen to break below it. The targets on the topside are eyed around Thursday’s high of 1.5472, then next resistance levels on the topside at 1.5525 (15 Apr high) and 1.5580 (200-day moving average).
Should our bullish bias be compromised by a fresh break below 1.5230, we would expect next supports at the 1.5080 former neckline, 100-day moving average 1.4988, then the 12 Jul low 1.4949.
GBPUSD’s soaring rally has finally started to show some signs of easing up, but despite the break through some recent uptrend supports, the pair still looks comfortably buoyed above 1.5230.
We now treat that 1.5230 level as a pivot for our trading strategy, looking to buy on dips below 1.5250, but willing to flip to a short position should we happen to break below it. The targets on the topside are eyed around Thursday’s high of 1.5472, then next resistance levels on the topside at 1.5525 (15 Apr high) and 1.5580 (200-day moving average).
Should our bullish bias be compromised by a fresh break below 1.5230, we would expect next supports at the 1.5080 former neckline, 100-day moving average 1.4988, then the 12 Jul low 1.4949.
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USDCHF
The 3-week downtrend channel continues to direct price action in the short term, but thus far the bears have not managed to muster a decent attempt at breaking below 1.0400 despite a couple of attempts late last week.
For now, the ranges are a bit too tight for us to get in at current levels with any sort of attractive risk-reward (pair currently trading around 1.0460), so we wait on the sidelines until we are closer to the defined technical levels or a decent break-out either way gives us the signal to re-enter the market. Our preference is still for this pair to head lower in the medium term, so we would be tempted to sell on any rally towards Friday’s high of 1.0550, as this comes with the added resistance of the downtrend at 1.0560 just behind.
Some bulls may favour buying on the dips towards, 1.0400, but the landscape below 1.0400 is only dotted with stale support levels at 1.0365, 1.0315 (trendline support), then 1.0230.
The 3-week downtrend channel continues to direct price action in the short term, but thus far the bears have not managed to muster a decent attempt at breaking below 1.0400 despite a couple of attempts late last week.
For now, the ranges are a bit too tight for us to get in at current levels with any sort of attractive risk-reward (pair currently trading around 1.0460), so we wait on the sidelines until we are closer to the defined technical levels or a decent break-out either way gives us the signal to re-enter the market. Our preference is still for this pair to head lower in the medium term, so we would be tempted to sell on any rally towards Friday’s high of 1.0550, as this comes with the added resistance of the downtrend at 1.0560 just behind.
Some bulls may favour buying on the dips towards, 1.0400, but the landscape below 1.0400 is only dotted with stale support levels at 1.0365, 1.0315 (trendline support), then 1.0230.
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