FX Technical Analysis
EURUSD
Comment: Consolidating in a neat little range just under this year's highs (1.3801 on the 8th January and 1.3739 on the 19th March). It is just a matter of time before we rally through here, with the Swiss franc snapping close on the Euro's heels, behind the Yen. One-month at-the-money implied volatility appears to have based at the pivotal 13.00% area and is now expected to pick up towards 19.00%.
Strategy: Buy at 1.3550; stop below 1.3400. Add to longs on a sustained break above 1.3750 for 1.3800 and then 1.4000.
Direction of Trade: →↗
Chart Levels:
| Support | Resistance |
| 1.3525 " | 1.3602 |
| 1.35 | 1.3645 |
| 1.3465 | 1.3722 |
| 1.3400* | 1.38 |
| 1.33 | 1.3965 |
GBPUSD
Comment: Consolidating fairly neatly, is not overbought and momentum is steadily bullish. We expect January's high at 1.5375 8th January to be tested some time this week, with the 9-day moving average at 1.5095 hopefully helping to push it up to here. Another round of buy stops is likely above 1.5500.
Strategy: Buy at 1.5125; stop well below 1.5000. Add to longs on a sustained break above 1.5375 for 1.5500 short term and then 1.5725/1.5800.
Direction of Trade: →↗
Chart Levels:
| Support | Resistance |
| 1.5100 " | 1.5212 |
| 1.5069 | 1.528 |
| 1.5 | 1.5354/1.5375* |
| 1.4940* | 1.5535 |
| 1.4835 | 1.5725 |
USDJPY
Comment: Dropping quickly to the bottom of a large Ichimoku 'cloud' and will probably try and hold above here this morning, maybe all day. The move adds weight to our view that price action since February is some sort of irregular 'head-and-shoulders' top and because many Yen crosses look similar the Yen should outperform most currencies over the next month or so. If not today then next week we favour a re-test of the 50% Fibonacci retracement at 94.25 and the March low at 93.55.
Strategy: Attempt shorts on a bounce to 96.00, adding to 96.70; stop above 98.00. Add to shorts below 95.00 for 94.25, possibly 93.55.
Direction of Trade: →
Chart Levels:
| Support | Resistance |
| 95.14/95.00* " | 95.75 |
| 94.5 | 96 |
| 94.25/94.15* | 96.45 |
| 93.75 | 96.7 |
| 93.55* | 97.5 |
EURJPY
Comment: Hovering at the 50% Fibonacci retracement of the most recent rally in the middle of a very large Ichimoku 'cloud'. Chikou Span has dropped below the moving averages which help to turn momentum bearish. Eventually we favour a drop to the 126.00 area, maybe more.
Strategy: Attempt shorts at 129.50, adding to 131.00; stop above 134.85. Add to shorts on a sustained break below 128.00 for 126.40.
Direction of Trade: →
Chart Levels:
| Support | Resistance |
| 128.87 " | 129.98 |
| 128.3 | 130.5 |
| 127.25 | 131 |
| 126.40/126.10* | 132 |
| 125.65 | 134.40/134.85 |
Fundamental Analysis
Here is the video:
05-14-2009.swf
Some great trading yesterday as just about everything worked out well... our sells in stocks and many currency pairs were pretty well timed and we got a nice break on the BoE Inflation Report. With all the doom and gloom coming out of the BoE with that release, it's really exacerbated the flipping of sentiment negative that we've seen, and a more substantial decline in EUR/USD, and XXX/JPY pairs is starting to take shape. As I write this, it looks like a potential short term bounce is brewing, but I would see that as more of an opportunity to enter a short on the bounce, or add to or reenter shorts you many have taken profits on. I talk about this more in detail in the video.
Stocks may find support as well in this 775-885 range on the S&P as channel support as held for quite some time; however, any decent bounce to 900 or above should be seen as a good shorting opportunity with 914 as a high level that should hold for some time. Longer term, a steep decline in stocks will find a bottom somewhere above 666 and set the stage for a rally to new 2009 highs; however, the precise level it will find that support is currently unclear.
Retail sales in the US yesterday was also negative catching the markets off guard and with that prenews buying we forecasted that developed, there was a lot of quick selling as a result of the bad release. Gold is wavering around right now and a bit unclear with mixed fundamental pressures all fighting to take hold. For news tomorrow:
0830 US Core PPI m/m (0.1% expected) - Inflation numbers have a bit of a mixed effect on USD at times, so I would look to trade this on USD/JPY to play it a little safer. Look for the Unemployment Claims numbers to help with this trade in order to have more confidence in it with higher claims providing selling pressure and lower claims helping the buying side.
If PPI Core comes in at 0.3% or higher, USD/JPY should rally by 20-40 pips
If PPI Core comes in at -0.1% or lower, USD/JPY should fall by 20-40 pips
NZ Retail Sales I don't think is a very good news trade nowadays so I recommend skipping it.
Economic Calender for today
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