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GBPUSD
GBPUSD looks to be carving out a bearish flag pattern on the daily chart, but this morning the continued short squeeze on risk assets has threatened to test the upper bound of that sloped channel around 1.5820. Given the overarching bear trend, this seems like a tempting opportunity for a very low risk punt on a continued move lower; we prefer to sell around 1.5800-10 area, leaving a tight stop just above the 1.5833 major pivot level, and look for the pair to move back towards 1.5650 levels.
Obviously in the current unpredictable climate, this strategy has the appeal that even a quick 100 pip profit into the channel would represent a very tasty reward compared to potential risk taken, and the only decent supports to be wary of do not come in until 1.5600. The fibonacci retracement level at 1.5690 (38.2% of 1.3505 to 1.7043) proved to be highly ineffectual in the past few sessions, and the major 14 month uptrend vibration channel is a way off at 1.5545 which adds to our conviction.
Although there is likely to be a build up of stops above that 1.5833 pivot (hence our adherence to a very disciplined stop around there), really only daily close above 1.5900 (above the 1 month downtrend) would force us to reconsider our bearish outlook for the short to medium term.
GBPUSD looks to be carving out a bearish flag pattern on the daily chart, but this morning the continued short squeeze on risk assets has threatened to test the upper bound of that sloped channel around 1.5820. Given the overarching bear trend, this seems like a tempting opportunity for a very low risk punt on a continued move lower; we prefer to sell around 1.5800-10 area, leaving a tight stop just above the 1.5833 major pivot level, and look for the pair to move back towards 1.5650 levels.
Obviously in the current unpredictable climate, this strategy has the appeal that even a quick 100 pip profit into the channel would represent a very tasty reward compared to potential risk taken, and the only decent supports to be wary of do not come in until 1.5600. The fibonacci retracement level at 1.5690 (38.2% of 1.3505 to 1.7043) proved to be highly ineffectual in the past few sessions, and the major 14 month uptrend vibration channel is a way off at 1.5545 which adds to our conviction.
Although there is likely to be a build up of stops above that 1.5833 pivot (hence our adherence to a very disciplined stop around there), really only daily close above 1.5900 (above the 1 month downtrend) would force us to reconsider our bearish outlook for the short to medium term.
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Gold
The false break lower of the major descending triangle on 4 Feb appears to have scuppered a lot of speculators, as buying interest off the 12 month uptrend channel around $1044 has since driven us back above the major $1074-75 neckline and today looks to be breaking above the 2 month downtrend at $1101.
A daily close above that level will compel us to look for a continuation of the major uptrend channel, and bulls will be comforted to hear that resistance is not expected above here until $1142, then around $1161 (10-11 Jan highs). Nevertheless, until that closing break above this 2 month downtrend is confirmed, the uncertainty surrounding EURUSD is good enough reason for us to stay on the sidelines.
The false break lower of the major descending triangle on 4 Feb appears to have scuppered a lot of speculators, as buying interest off the 12 month uptrend channel around $1044 has since driven us back above the major $1074-75 neckline and today looks to be breaking above the 2 month downtrend at $1101.
A daily close above that level will compel us to look for a continuation of the major uptrend channel, and bulls will be comforted to hear that resistance is not expected above here until $1142, then around $1161 (10-11 Jan highs). Nevertheless, until that closing break above this 2 month downtrend is confirmed, the uncertainty surrounding EURUSD is good enough reason for us to stay on the sidelines.
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USDJPY
The 1 month downtrend remains the dominant driver of USDJPY, currently coming in around 90.15, and likely to be further protected by very short-term resistance at 89.95. In terms of targets on the downside, the 1 week uptrend support now comes in around 89.30-35; also coinciding with expected support from the fib retracement level (50.0% of 84.83 to 93.77), and backed up by the prior 89.15 level that represented the floor for USDJPY last week. If we do see a resumption of the larger downtrend below 89.15 then really the 88.55 lows from 4 Feb represent the final level of buying interest, before the lower bound of the current downtrend channel at 87.20.
Given the potency of the bearish bias and the considerable macroeconomic uncertainty, we favour playing this from the short side, however if we do see a breach of 90.15, there are plenty of levels of selling interest likely to come in around 90.35 (38.2% fib retracement level), 90.55 pivot level, and 91.00 resistance.
The 1 month downtrend remains the dominant driver of USDJPY, currently coming in around 90.15, and likely to be further protected by very short-term resistance at 89.95. In terms of targets on the downside, the 1 week uptrend support now comes in around 89.30-35; also coinciding with expected support from the fib retracement level (50.0% of 84.83 to 93.77), and backed up by the prior 89.15 level that represented the floor for USDJPY last week. If we do see a resumption of the larger downtrend below 89.15 then really the 88.55 lows from 4 Feb represent the final level of buying interest, before the lower bound of the current downtrend channel at 87.20.
Given the potency of the bearish bias and the considerable macroeconomic uncertainty, we favour playing this from the short side, however if we do see a breach of 90.15, there are plenty of levels of selling interest likely to come in around 90.35 (38.2% fib retracement level), 90.55 pivot level, and 91.00 resistance.
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EURUSD
Yesterday’s US market holiday made for a slow day in EURUSD with a narrow 1.3579-1.3633 range defining the day’s price action, allowing the 14-day RSI to edge back out of oversold territory to 33 levels. Although there’s likely to be a bit more activity today with the US back in and the ZEW survey scheduled this morning, developments in Greece will overshadow most other variables in dictating EURUSD’s bias in the medium term.
For now, the 2 week downtrend is the line to watch; with resistance having held on the past 4 occasions, this morning coming in at 1.3665. We should however note that in the absence of other catalysts, there are a number of support levels now in play below which will make price action sticky; starting with yesterday’s 1.3579 lows, then the 1.3531 reaction low from 12 Feb, and below there the 1.3484 fibonacci retracement level (61.8% of 1.2457 to 1.5145).
A break above this 2 week downtrend can be expected to easily reach 1.3760 (coinciding with a vibration channel of the larger 3 month downtrend), but should find significant resistance just above the psychological 1.3800 level (and 50% fib retracement level of 1.2457-1.5145). As such, the pay-off profile of waiting for a break higher looks to be the most attractive right now, but disciplined stops will be necessary given the overarching bear trend is still to be respected.
Yesterday’s US market holiday made for a slow day in EURUSD with a narrow 1.3579-1.3633 range defining the day’s price action, allowing the 14-day RSI to edge back out of oversold territory to 33 levels. Although there’s likely to be a bit more activity today with the US back in and the ZEW survey scheduled this morning, developments in Greece will overshadow most other variables in dictating EURUSD’s bias in the medium term.
For now, the 2 week downtrend is the line to watch; with resistance having held on the past 4 occasions, this morning coming in at 1.3665. We should however note that in the absence of other catalysts, there are a number of support levels now in play below which will make price action sticky; starting with yesterday’s 1.3579 lows, then the 1.3531 reaction low from 12 Feb, and below there the 1.3484 fibonacci retracement level (61.8% of 1.2457 to 1.5145).
A break above this 2 week downtrend can be expected to easily reach 1.3760 (coinciding with a vibration channel of the larger 3 month downtrend), but should find significant resistance just above the psychological 1.3800 level (and 50% fib retracement level of 1.2457-1.5145). As such, the pay-off profile of waiting for a break higher looks to be the most attractive right now, but disciplined stops will be necessary given the overarching bear trend is still to be respected.
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GBPUSD
Price action has been choppy but within a restricted range, giving the pair a neutral tone. The GBPUSD has been contracting between 1.5530 to 1.5748 since Feb 8th and is showing scant evidence of a potential directional break‐out (momentum indicators are mixed). By Wednesday, the shorter channel of the dominating downtrend comes into play at 1.5720, where it connects also with 38.2% Fib level and should provide decent resistance.
We expect strong buying interest directly around 1.5530, which should provide near term support. However, a break would signal a continuation of the dominating downtrend and a potential test of 1.5275 (50.0% Fib retracement 1.3510 –1‐7063). With a big week for UK data and events, we would be looking to trade any direction of a range‐breakout but especially like trades from the short side.
Price action has been choppy but within a restricted range, giving the pair a neutral tone. The GBPUSD has been contracting between 1.5530 to 1.5748 since Feb 8th and is showing scant evidence of a potential directional break‐out (momentum indicators are mixed). By Wednesday, the shorter channel of the dominating downtrend comes into play at 1.5720, where it connects also with 38.2% Fib level and should provide decent resistance.
We expect strong buying interest directly around 1.5530, which should provide near term support. However, a break would signal a continuation of the dominating downtrend and a potential test of 1.5275 (50.0% Fib retracement 1.3510 –1‐7063). With a big week for UK data and events, we would be looking to trade any direction of a range‐breakout but especially like trades from the short side.
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EURGBP
Last week’s bearish reversal candle formation off the 200d MA at 0.8829 renews our expectation of a potential test of 0.8600 support.Any move to the upside will face a clutter path, with minor resistance at 0.8725, 0.8775, 0.8800 and then a true test of themajor bearish channel at 0.8870.
But with daily momentum indictors signalling a bearish environment, near term demand pushed out, and combined with our EUR view, we believe considerable bearish risks remain for this pair and prefer to be on the short side of the trade.
Last week’s bearish reversal candle formation off the 200d MA at 0.8829 renews our expectation of a potential test of 0.8600 support.Any move to the upside will face a clutter path, with minor resistance at 0.8725, 0.8775, 0.8800 and then a true test of themajor bearish channel at 0.8870.
But with daily momentum indictors signalling a bearish environment, near term demand pushed out, and combined with our EUR view, we believe considerable bearish risks remain for this pair and prefer to be on the short side of the trade.
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USDJPY
The USDJPY seems to have slept through last week’s excitement and continues to drift higher, while smack in the middle of daily cloud cover. The slow methodical climb is still within the pair’s larger bearish channel (Jan 8th high), but is on a near term collision course with 90.30 channel high. With multiple bullish uptrend lines developing, it seems that this move could develop into more than just a corrective drift.
For now, there should be solid support at 89.70 bullish short‐term trend (Feb 4th lows), then expect decent demand at 88.25 ‐35 (61.8% fib retracement and daily cloud base). We are still looking to play this pair from the long side, as daily momentum indicators have turned bullish and the speed of the January 4th descent has already cleared a path for a natural move to 91.30. In addition, the pair’s resiliency as markets unwind risk trades gives us a level of reassurance from random EU / Greek comments.
The USDJPY seems to have slept through last week’s excitement and continues to drift higher, while smack in the middle of daily cloud cover. The slow methodical climb is still within the pair’s larger bearish channel (Jan 8th high), but is on a near term collision course with 90.30 channel high. With multiple bullish uptrend lines developing, it seems that this move could develop into more than just a corrective drift.
For now, there should be solid support at 89.70 bullish short‐term trend (Feb 4th lows), then expect decent demand at 88.25 ‐35 (61.8% fib retracement and daily cloud base). We are still looking to play this pair from the long side, as daily momentum indicators have turned bullish and the speed of the January 4th descent has already cleared a path for a natural move to 91.30. In addition, the pair’s resiliency as markets unwind risk trades gives us a level of reassurance from random EU / Greek comments.
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EURUSD
Right now it’s stylish to be a EURUSD bear. The fundamentals such as EUR sovereign credit concerns, renewed speculation over the fate of Dubai World creditors and worrying IMM trade data, signalling that traders are significantly short the singlecurrency (which we don’t view as a indication to take the contrarian view), all point to further selling. In addition the dominating bearish trend continues to entrenches itself and the absolute collapse of all relevant demand regions last week, doesn’t bode well for our confidence in near‐term support. Friday’s break of 1.3595 (post‐NFP lows and minor uptrend support) bear trigger now puts the focus clearly on 1.3484 (61.8% fib retracement of 2009 rally).
Yet with the the whole world being EURUSD perm bears, we are on the watch for a short squeeze driven, corrective bounce. Daily indicators signalling oversold and forewarning hammer pattern seen at the end of last week will make us tread cautiously. However, with decent supply resting at 1.3696 (shorter bear channel resistance from 1.4580 and 5d MA) ahead of 1.3839 (Feb 9th high) any upside should be limited. We would play this one on the short side, looking to sell slightly above resistance or break of support.
Right now it’s stylish to be a EURUSD bear. The fundamentals such as EUR sovereign credit concerns, renewed speculation over the fate of Dubai World creditors and worrying IMM trade data, signalling that traders are significantly short the singlecurrency (which we don’t view as a indication to take the contrarian view), all point to further selling. In addition the dominating bearish trend continues to entrenches itself and the absolute collapse of all relevant demand regions last week, doesn’t bode well for our confidence in near‐term support. Friday’s break of 1.3595 (post‐NFP lows and minor uptrend support) bear trigger now puts the focus clearly on 1.3484 (61.8% fib retracement of 2009 rally).
Yet with the the whole world being EURUSD perm bears, we are on the watch for a short squeeze driven, corrective bounce. Daily indicators signalling oversold and forewarning hammer pattern seen at the end of last week will make us tread cautiously. However, with decent supply resting at 1.3696 (shorter bear channel resistance from 1.4580 and 5d MA) ahead of 1.3839 (Feb 9th high) any upside should be limited. We would play this one on the short side, looking to sell slightly above resistance or break of support.
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