Technical Analysis for Major Currencies

EURO

The Euro versus Dollar pair was able to reach our initial target at 1.3720 as it continued to incline to near the pivotal resistance level at 1.3850 (61.8% correction for the key descending channel). As we see in the above image, the pair is attempting to target 1.4055 yet we may witness a slight downside correction to 1.3680 to maintain the uptrend and gather bullish momentum to breach the 1.3850 level.

The trading range for today is among the key support at 1.3580 and the key resistance at 1.4055

The general trend is to the downside as far as 1.4710 remains intact with targets at 1.2120

Support: 1.3735, 1.3680, 1.3640, 1.3580, 1.3540
Resistance: 1.3850, 1.3905, 1.3990, 1.4055, 1.4120

Recommendation: According to our analysis, sell the pair below 1.3755 with targets at 1.3680 and 1.3640 and stop loss with four hour closing above 1.3850

GBP

The Cable continued to rise yesterday to reach the key resistance of the ascending channel at 1.5795 and then again at 1.5815. We expect a slight downside correction to 1.5550 in an attempt to gather bullish momentum before rebounding back to the upside targeting 1.6300. This incline remains as far as 1.5490 is intact on the short term.

The trading range for today is among the key support at 1.5490 and the key resistance at 1.6100

The general trend is to the upside as far as 1.4840 is intact with targets at 1.6600

Support: 1.5730, 1.5685, 1.5645, 1.5550, 1.5490
Resistance: 1.5815, 1.5885, 1.5925, 1.6005, 1.6070

Recommendation: According to our analysis, sell the pair below 1.5730 with targets at 1.5645 and 1.5550 and stop loss with four hour closing above 1.5815

JPY

After the continuous pressure on the minor support level, the USD/JPY pair was able to decline as expected to reach our initial target at 94.55 and maintain levels below it. The short term remains to the downside yet we may witness a correction to the upside to 95.75 to relieve momentum indicators before reversing back to the downside towards 93.50 and 92.40 as far as 96.90 is intact.

The trading range for today is among the key support at 92.40 and the key resistance at 98.50

The general trend is to the downside as far as 102.60 remains intact with targets at 84.95 and 82.60

Support: 93.95, 93.50, 92.95, 92.40, 92.05
Resistance: 94.55, 95.15, 95.75, 96.45, 96.90

Recommendation: According to our analysis, buy the pair above 94.55 with targets at 95.75 and stop loss with four hour closing below 93.50

CHF

The Dollar versus Swissy declined yesterday to reach our initial target yet it faced the pivotal support which may halt further losses for the pair. The short term trend remains to the downside with the possibility of witnessing upside correctional movements to 1.1075 and 1.1155 at most (the key resistance for the downside channel) before reversing back to the downside towards 1.0745 and 1.0570. The 1.1445 level must remain intact for the declines to continue.

The trading range for today is among the key support at 1.0745 and the key resistance at 1.1445

The general trend is to the downside as far as 1.0570 remains intact with targets at 1.2245

Support: 1.0980, 1.0920, 1.0880, 1.0795, 1.0745
Resistance: 1.1075, 1.1155, 1.1250, 1.1315, 1.1355

Recommendation: According to our analysis, sell the pair below 1.1075 with targets at 1.0980 and 1.0880 and stop los with four hour closing above 1.1155

CAD

The Dollar versus Loonie continued to decline as it nearly completed the targets pointed out yesterday near the critical support at 1.1335. We expect the pair to incline towards the key resistance for the major descending channel at 1.1970 before being able to confirm the short term trend. This incline remains as far as 1.1335 is intact.

The trading range for today is among the key support at 1.1335 and the key resistance at 1.1970

The general trend is to the upside as far as 1.1335 is intact with targets at 1.3000

Support: 1.1335, 1.1300, 1.1275, 1.1200, 1.1085
Resistance: 1.1475, 1.1545, 1.1600, 1.1650, 1.1675

Recommendation: According to our analysis, buy the pair above 1.1335 with targets at 1.1475 and stop loss with four hour closing below 1.1275

Fundamental Analysis

Here is the link for the video:
05-21-2009.swf

I'm really excited because I believe things are finally starting to set up short in a much more clear manner. The downside we've anticipated in our signals over the last few days is starting to take shape and increase in probability. The S&P yesterday completed a major head fake move upwards only to get slammed down late which is further evidence of a top that should cause further dominoes to fall downwards. Getting short in this region is still getting in pretty early if we get the 100+ point decline that we are long overdue. A break of the 875 lows will solidify this view while a break upwards of Wednesday's highs will bring doubts to the table and force us to reassess our outlook. Please watch the video for a more detailed look at this and the other forecasts.

Assuming we are near the start of a more major stock decline, the strong correllation between stocks & risk aversion with JPY and USD strength should help force the major XXX/USD and XXX/JPY pairs lower. I prefer shorts on EUR/USD, AUD/USD and GBP/USD right now since they've had some nice rallies and have plenty of room to the downside, but their JPY cross counterparts should see downside as well and perhaps even more so if USD/JPY can continue its downwards momentum instead of finding support. Specifically on EUR/USD, I think a near-term selloff to 1.3585 and possibly a test of the 1.3400 lows is in the works, so I'm short now as I write this from the 1.3760's with those levels as take profits.

After yesterday's update, I've taken a much closer look at gold and unfortunately, I think it has further to rise near-term. I had thought 935-950 would contain golds rally, but with an equity market selloff likely making gold look more attractive, I think a more substantial rise to 965 to 972 is the more likely scenario. I recommend covering shorts and scalping long, or holding short through the rise and adding more in that region depending on how leveraged you are. I do still feel confident that a much more substantial decline will develop after this rally completes.

News on Wednesday was pretty insignificant with not much to work with, but it is evident that CAD releases are getting manipulated post-release, so we'll be careful on future CAD news. For Thursday:

0430 UK Retail Sales m/m (0.5% expected) - UK Retail Sales will likely get a lot more attention today and in coming months as they've changed their methodologies. This will also likely increase the probability of getting a nice surprise.
If it comes out at 1.5% or higher, GBP/USD should rally 50 pips
If it comes out at -0.5% or lower, GBP/USD should fall 50 pips

1000 US Philly Fed Index (-18 expected) - This indicator has performed rather poorly and I don't recommend trading smaller triggers; however, a big surprise could get something going. I trust a downside trigger more than a positive surprise. If there is a much smaller positive surprise, I might consider selling into a spike up and grabbing action on a reversal.
If it comes out at 0 or higher (positive) then EUR/JPY should rally by 35 pips or so
If it comes out at -36 or lower, then EUR/JPY should sell off by 40+ pips

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