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USDCHF
Range trading wins out in USDCHF, despite the vulnerability of the USD elsewhere. A second thrust towards 1.0350 support yesterday elicited a strong bounce back above 1.0400 today, which leaves the pair smack in the middle of its 1.0350-1.0475 range.
We still feel that the downside is the more vulnerable to a break-out scenario so we prefer to sell rallies towards 1.0475 and/or wait to go short on a sell-off below 1.0350. Once 1.0350 is overcome, only sketchy downtrend support below it at 1.0285 lies in the way of a return to the 19 Jan low 1.0229 and the 11 Jan low 1.0131.
Above 1.0475, we may have to concede that a double bottom pattern is in play, and would therefore shift to a long position and look for another test of 1.0560 and 1.0640-50 (27 Jul high and 200-day moving average).
USDCHF
Range trading wins out in USDCHF, despite the vulnerability of the USD elsewhere. A second thrust towards 1.0350 support yesterday elicited a strong bounce back above 1.0400 today, which leaves the pair smack in the middle of its 1.0350-1.0475 range.
We still feel that the downside is the more vulnerable to a break-out scenario so we prefer to sell rallies towards 1.0475 and/or wait to go short on a sell-off below 1.0350. Once 1.0350 is overcome, only sketchy downtrend support below it at 1.0285 lies in the way of a return to the 19 Jan low 1.0229 and the 11 Jan low 1.0131.
Above 1.0475, we may have to concede that a double bottom pattern is in play, and would therefore shift to a long position and look for another test of 1.0560 and 1.0640-50 (27 Jul high and 200-day moving average).
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GBPUSD
It’s amazing to look back and acknowledge that GBPUSD has rallied over 7% since the start of July, and an impressive 5.5% in the last 2 weeks alone; but the bulls may finally be meeting a worthy adversary in the form of significant selling pressure ahead of 1.6000.
For the time being, decent supply around 1.5965 has suppressed the pair from proceeding any further, and in our view, 1.6000 should be a strong enough barrier (both option-related and psychological) to rebut the bulls and allow for a correction lower. Even if an exuberant surge in risk appetite could puncture 1.6000 on this occasion, further rallies would undoubtedly struggle around the top edge of the current 2-month uptrend 1.6080). That’s not to say we are shifting to a bearish bias; merely that this leg of the rally feels somewhat overextended and we’d like to way for a cleansing correction lower before recharging longs.
We still expect impatient buyers to jump in back towards 1.5866 (61.8% fibonacci retracement of the sell off from 1.6878 to 1.4229)and1.5740 (lower edge of 2-week uptrend), but we would ideally like a deeper sell-off towards the1.5660 former resistance (now turned support) and the 200-day moving average at 1.5534 before we get our feet wet.
GBPUSD
It’s amazing to look back and acknowledge that GBPUSD has rallied over 7% since the start of July, and an impressive 5.5% in the last 2 weeks alone; but the bulls may finally be meeting a worthy adversary in the form of significant selling pressure ahead of 1.6000.
For the time being, decent supply around 1.5965 has suppressed the pair from proceeding any further, and in our view, 1.6000 should be a strong enough barrier (both option-related and psychological) to rebut the bulls and allow for a correction lower. Even if an exuberant surge in risk appetite could puncture 1.6000 on this occasion, further rallies would undoubtedly struggle around the top edge of the current 2-month uptrend 1.6080). That’s not to say we are shifting to a bearish bias; merely that this leg of the rally feels somewhat overextended and we’d like to way for a cleansing correction lower before recharging longs.
We still expect impatient buyers to jump in back towards 1.5866 (61.8% fibonacci retracement of the sell off from 1.6878 to 1.4229)and1.5740 (lower edge of 2-week uptrend), but we would ideally like a deeper sell-off towards the1.5660 former resistance (now turned support) and the 200-day moving average at 1.5534 before we get our feet wet.
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USDJPY
Just as we suspected, USDJPY’s weakened support around 86.00 was insufficient to fend off a further push from the bears, and this morning the pair has dipped to fresh 2010 lows of 85.32. For the time being, the lower edge of a 5-week downtrend channel (around 85.40-5) is stalling the sell-off from accelerating further, but the fidelity of that trendline is certainly under threat from a new, steeper 1-week downtrend channel.
Should 5-week trendline support give way and trigger a collapse through 85.32, the next major level is the November 2009 low of 84.83 –a locus that holds double significance at the moment because it also coincides with the lower edge of the 1-week downtrend channel. Below 84.83 we would be in waters uncharted since 1995, so hold onto your hats!
Until that stage, rallies are likely to face strong resistance towards 85.98 (former support), 86.10 (upper edge of the 1-week downtrend) and 86.89 (Monday’s high). In the unlikely event the bulls can push above there, ample selling interest should precipitate around 87.75 (back side of former short-term uptrend) with 88.00 also just behind.
USDJPY
Just as we suspected, USDJPY’s weakened support around 86.00 was insufficient to fend off a further push from the bears, and this morning the pair has dipped to fresh 2010 lows of 85.32. For the time being, the lower edge of a 5-week downtrend channel (around 85.40-5) is stalling the sell-off from accelerating further, but the fidelity of that trendline is certainly under threat from a new, steeper 1-week downtrend channel.
Should 5-week trendline support give way and trigger a collapse through 85.32, the next major level is the November 2009 low of 84.83 –a locus that holds double significance at the moment because it also coincides with the lower edge of the 1-week downtrend channel. Below 84.83 we would be in waters uncharted since 1995, so hold onto your hats!
Until that stage, rallies are likely to face strong resistance towards 85.98 (former support), 86.10 (upper edge of the 1-week downtrend) and 86.89 (Monday’s high). In the unlikely event the bulls can push above there, ample selling interest should precipitate around 87.75 (back side of former short-term uptrend) with 88.00 also just behind.
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EURUSD
Not only has the latest surge to highs of 1.3262 brought us within 30 pips of our symmetrical triangle target 1.3290, but the push through 1.3185 has also activated a bullish flag pattern on the hourly chart. Conveniently, this second pattern has allowed many who missed the original triangle break-out (back down at 1.2950) to get in on the long trade, and conveniently the target for this flag is virtually the same as the triangle’s, at 1.3300.
With the uptrend channel looking extremely robust and the 13 May high of 1.3254 already conquered, the 1.3262 peak from yesterday is the only resistance level (and a mere formality) eyed ahead of 1.3300. Beyond there we see further pockets of supply dotted at 1.3362 (2 May high), 1.3415 (26 Apr high) and 1.3561 (200-day moving average).
Support is expected to lie below us around 1.3185 (flag breakout level), yesterday’s low 1.3147, then the 5-week uptrend channel support at 1.3095.
EURUSD
Not only has the latest surge to highs of 1.3262 brought us within 30 pips of our symmetrical triangle target 1.3290, but the push through 1.3185 has also activated a bullish flag pattern on the hourly chart. Conveniently, this second pattern has allowed many who missed the original triangle break-out (back down at 1.2950) to get in on the long trade, and conveniently the target for this flag is virtually the same as the triangle’s, at 1.3300.
With the uptrend channel looking extremely robust and the 13 May high of 1.3254 already conquered, the 1.3262 peak from yesterday is the only resistance level (and a mere formality) eyed ahead of 1.3300. Beyond there we see further pockets of supply dotted at 1.3362 (2 May high), 1.3415 (26 Apr high) and 1.3561 (200-day moving average).
Support is expected to lie below us around 1.3185 (flag breakout level), yesterday’s low 1.3147, then the 5-week uptrend channel support at 1.3095.
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USDCHF
What a choppy mess! Although USDCHF may have looked somewhat directionless and rangebound in the past few days, the overwhelming message from the rest of the currency space appears to be “sell the dollar”, so this may be a pair worth watching for a downside break before it actually takes place.
The downside level to watch will be yesterday’s low 1.0348, which has only weak former downtrend support below it at 1.0305. Below there we start looking back to levels not seen since the beginning of the year; namely the 19 Jan low 1.0229 and the 11 Jan low 1.0131.
Selling interest is expected to materialize around 1.0415 (today’s high) and then again at yesterday’s peak of 1.0476.
USDCHF
What a choppy mess! Although USDCHF may have looked somewhat directionless and rangebound in the past few days, the overwhelming message from the rest of the currency space appears to be “sell the dollar”, so this may be a pair worth watching for a downside break before it actually takes place.
The downside level to watch will be yesterday’s low 1.0348, which has only weak former downtrend support below it at 1.0305. Below there we start looking back to levels not seen since the beginning of the year; namely the 19 Jan low 1.0229 and the 11 Jan low 1.0131.
Selling interest is expected to materialize around 1.0415 (today’s high) and then again at yesterday’s peak of 1.0476.
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GBPUSD
Like a hot knife through butter, GBPUSD is slicing through topside resistance levels like they’re not even there; the latest victim being the 17 Feb high 1.5816 which gave way without so much as a whimper. We have also clambered above 1.5866 (61.8% fibonacci retracement of the sell off from 1.6878 to 1.4229), and that should now act as a decent pivot level to buy off.
The only resistance level worth paying attention to in the near term is the hugely significant 1.6000 barrier where option-related interest may block the route higher on the first few attempts; and in addition further rallies will have a decent pocket of supply to overcome around the top edge of the current 2-month uptrend (currently 1.6040)
Nevertheless, to say GBP has a bid tone would be an understatement, so expect buyers to jump in keenly back towards that 1.5866 fibonacci level, then again at 1.5660 (former resistance now turned support) and the 200-day moving average at 1.5537.
GBPUSD
Like a hot knife through butter, GBPUSD is slicing through topside resistance levels like they’re not even there; the latest victim being the 17 Feb high 1.5816 which gave way without so much as a whimper. We have also clambered above 1.5866 (61.8% fibonacci retracement of the sell off from 1.6878 to 1.4229), and that should now act as a decent pivot level to buy off.
The only resistance level worth paying attention to in the near term is the hugely significant 1.6000 barrier where option-related interest may block the route higher on the first few attempts; and in addition further rallies will have a decent pocket of supply to overcome around the top edge of the current 2-month uptrend (currently 1.6040)
Nevertheless, to say GBP has a bid tone would be an understatement, so expect buyers to jump in keenly back towards that 1.5866 fibonacci level, then again at 1.5660 (former resistance now turned support) and the 200-day moving average at 1.5537.
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USDJPY
USDJPY still looks extremely vulnerable after its dip to new 2010 lows of 85.98, and yesterday’s attempted recovery only got as far as 86.89 before the bears got the better of it once more.
85.98 looks set to be challenged again this morning, and should we take a tumble below there then the prospects look grim for anyone still clinging to longs; downtrend channel support at 85.50 is the only demand anticipated ahead of the November 2009 low of 84.83.
Rallies are likely to face strong resistance towards 86.89 (yesterday’s high), and in the unlikely event the bulls can push above there, ample selling interest should precipitate around 87.50-60 (2-month downtrend resistance and back side of former 1-week uptrend) with 88.00 also just behind.
USDJPY
USDJPY still looks extremely vulnerable after its dip to new 2010 lows of 85.98, and yesterday’s attempted recovery only got as far as 86.89 before the bears got the better of it once more.
85.98 looks set to be challenged again this morning, and should we take a tumble below there then the prospects look grim for anyone still clinging to longs; downtrend channel support at 85.50 is the only demand anticipated ahead of the November 2009 low of 84.83.
Rallies are likely to face strong resistance towards 86.89 (yesterday’s high), and in the unlikely event the bulls can push above there, ample selling interest should precipitate around 87.50-60 (2-month downtrend resistance and back side of former 1-week uptrend) with 88.00 also just behind.
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EURUSD
Another burst higher for EURUSD has pushed us to new highs of 1.3195 and it’s so far so good for the bullish triangle pattern we have been engaged in for the past week. We are still sitting tight for an eventual target of 1.3290, but for those who missed the entry point back down around 1.2950 there is now a second opportunity to get long materializing here.
We see a potential bullish flag pattern on the hourly chart which would become activated on a break above 1.3185 and which would look to target 1.3300 –virtually the same as our triangle target. The only resistance levels left before either target are 1.3213 and 1.3254 (14 and 13 May highs respectively); so risk-reward definitely looks favourable for these bullish trades.
Should the bears re-emerge, they will likely find good bidders waiting eagerly to get long around 1.3106 former pivot level, not to mention at the 5-week uptrend channel support at 1.3055.
EURUSD
Another burst higher for EURUSD has pushed us to new highs of 1.3195 and it’s so far so good for the bullish triangle pattern we have been engaged in for the past week. We are still sitting tight for an eventual target of 1.3290, but for those who missed the entry point back down around 1.2950 there is now a second opportunity to get long materializing here.
We see a potential bullish flag pattern on the hourly chart which would become activated on a break above 1.3185 and which would look to target 1.3300 –virtually the same as our triangle target. The only resistance levels left before either target are 1.3213 and 1.3254 (14 and 13 May highs respectively); so risk-reward definitely looks favourable for these bullish trades.
Should the bears re-emerge, they will likely find good bidders waiting eagerly to get long around 1.3106 former pivot level, not to mention at the 5-week uptrend channel support at 1.3055.
Sign up for a free demo account to follow the analysis and trade.
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