Technical Analysis for Major Currencies
EURO
After the Euro versus the Dollar pair attempted to breach the pivot support at 1.4105, the pair rebounded back to the upside sharply after Trichet's speech. Trading remains limited among the 1.4105and 1.4245 levels which will determine the next intraday trend as we believe the pair is to attempt to breach the resistance level to the upside to continue the short term trend targeting 1.4710 as far as 1.3910 remains intact.
The trading range for today is among the key support at 1.3910 and the key resistance at 1.4620
The general trend is to the downside as far as 1.4710 remains intact with targets at 1.2120
Support: 1.4160, 1.4105, 1.4080, 1.4030, 1.3980
Resistance: 1.4225, 1.4245, 1.4320, 1.4395, 1.4440
Recommendation: According to our analysis, sell the pair below 1.4105 with targets at 1.4025 and 1.3910 and stop loss with fourh our closing above 1.4220
GBP
After mixed trading yesterday, the Cable decline towards our initial target at 1.6075 where we still believe the intraday trend is to the downside with the next target at the key support for the major upside channel at 1.5275 yet the short term trend remains to the downside. Note that the NFP is on queue at 12:30 GMT which may result in volatile trading.
The trading range for today is among the key support at 1.5725 and the key resistance at 1.6660
The general trend is to the upside as far as 1.4840 remains intact with targets at 1.6600
Support: 1.6075, 1.6015, 1.5945, 1.5875, 1.5810
Resistance: 1.6155, 1.6200, 1.6285, 1.6360, 1.6430
Recommendation: According to our analysis, sell the pair below 1.6075 with targets at 1.5945 and stop loss with four hour closing above 1.6155
JPY
The USD/JPY pair continued to incline towards our suggested target currently at 97.45 where we expect the pair is to reverse to the downside from this level to reach the short term targets at 93.40 after the breach of 95.35. The 97.70 level must remain intact for the decline to continue.
The trading range for today is among the key support at 91.90 and the key resistance at 99.40
The general trend is to the downside as far as 102.60 remains intact with targets at 84.95 and 82.60
Support: 96.45, 95.90, 95.35, 94.75, 94.50
Resistance: 97.45, 97.70, 98.10, 98.85, 99.55
Recommendation According to our analysis, sell the pair below 97.45 with targets at 96.45 and stop loss with four hour closing above 98.10
CHF
The 1.0745 was able to limit gains for the Dollar versus Swissy pair. We currently see the possibility of a formation of a bullish technical pattern with a neckline at the above mentioned level where we expect the pair is to attempt to breach this level to the upside on the intraday basis to incline towards the key resistance for the downside channel at 1.0910. The short term trend remains to the downside as far as 1.0910 is intact.
The trading range for today is among the key support at 1.0450 and the key resistance at 1.0910
The general trend is to the upside as far as 1.0570 remains intact with targets at 1.2245
Support: 1.0635, 1.0555, 1.0500, 1.0470, 1.0450
Resistance: 1.0745, 1.0800, 1.0860, 1.0910, 1.0980
Recommendation: According to our analysis, buy the pair above 1.0745 with targets at 1.0910 and stop loss with four hour closing below 1.0635
CAD
The Dollar versus Swissy pair was able to reach our downside target at 1.0970 due to the harmonic pattern where we expect the pair is to rebound to the upside to target the key resistance for the downside channel at 1.1265. The short term trend remains to the downside as far as the above mentioned resistance remains intact.
The trading range for today is among the key support at 1.0745 and the key resistance at 1.1265
The general trend is to the downside as far as 1.1870 remains intact with targets at 1.0300
Support: 1.0970, 1.0905, 1.0880, 1.0825, 1.0785
Resistance: 1.1025, 1.1090, 1.1150, 1.1195, 1.1230
Recommendation: According to our analysis, buy the pair above 1.0970 with targets at 1.1090 and stop loss with four hour closing below 1.0905
Technical Analysis for Crosses
GBP/JPY
Our suggested daily scenario is still in progress, as the British pound versus Japanese yen succeeded to form consecutive negative candlestick closings confirming the previous discussed reversal candlestick. A short and medium term top around 160.00 zones might be already placed while the weekly closing below the critical areas of 155.80 will bring a downside rally to activate the our detected Elliott corrective wave. Note that RSI 14 bearish sign has been activated already. Therefore our outlook today will be to the downside.
Trading range for today is among key support at 151.60 and key resistance at 160.00.
The general trend is to the downside as far as 164.90 remains intact with target at 116.00.
Support: 155.30, 154.60, 153.85, 152.90, 152.00
Resistance: 157.60, 158.15, 158.90, 159.35, 160.00
Recommendation: According to our analysis, sell the pair at 155.90 with targets at 153.25 and stop loss at 158.20.
EUR/JPY
The pivotal resistance area of 137.40 is still preventing the pair from developing the daily harmonic scenario, as we see on the secondary shorter time frame of the four-hour chart that it's trapped in a tight range area but trending downwards building a right shoulder of a classical head and shoulders pattern. Therefore a downside action is expected on the intraday basis unless a clear breakout occurs above 139.20 zones.
Trading range for today is among key support at 134.15 and key resistance now at 140.90.
The general trend is to the downside as far as 141.44 remains intact with targets at 100.00 followed by 88.97 levels.
Support: 137.00, 136.35, 135.70, 135.00, 134.15
Resistance: 138.00, 138.40, 139.00, 140.00, 140.90
Recommendation: According to our analysis, sell the pair at 137.30 with targets at 134.95 and stop loss at 139.25
EUR/GBP
The royal pair has shown fluctuating movements since yesterday, but it succeeded to breach the resistance line -upper line- of the descending channel beating the critical level of 0.8760. Now slight correctional movements are highly anticipated towards 0.8800 zones to relieve the indicators which show overbought signs and we think that it will be followed by a strong upward action, particularly if it succeeds to breach 0.8840 zones. Hence our overview will be to the upside today as far as 0.8720 remains unbroken decisively.
Trading range is among the key support 0.8650 and key resistance now at 0.9010.
The general trend is to the upside as far as 0.8020 area remains intact with targets at 1.0000 followed by 1.0400 levels.
Support: 0.8805, 0.8760, 0.8720, 0.8700, 0.8660
Resistance: 0.8840, 0.8875, 0.8900, 0.8940, 0.9010
Recommendation: According to our analysis, buy the pair at 0.8805 with targets at 0.8925 and stop loss at 0.8710.
We had a lot of news trades this morning, and I spent a lot of time recording video for our webinar in the Diamonds room today, so I'm a bit tired of video recording and would rather stick to a text signal tonight if you don't mind. The EUR/USD broke through 1.4100 to confirm the head and shoulders sell on the hourly, only to frustratingly rally back up as GBP continues to be the preferential sell. At the moment, as long as the 1.4241 highs hold on EUR/USD, the bias should be short from here. If those highs go I'd shift to neutral. If we do resume downside price action as we've seen on the GBP, the 1.3800 level is a likely medium term target. One big reason the GBP has been weak are rumors of UK Prime Minister Brown potentially resigning. These rumors have been refuted by his office, but the markets definitely still smell blood. Pretty much all of the scheduled news on Thursday came out pretty vanilla without any big surprises with the exception of very strong UK Halifax house prices which made a very nice short term GBP strengthening move of 80 pips in 40 minutes.
Stocks are working their way through what is likely the final phase of its advance before a significant, major, earthshattering decline. As Doug Hoenig described in a recent essay, we are in the eye of this economic storm, and a second major financial crisis is in store for us on the other side. This one will likley be worst than the last. We'll keep a close eye on stocks since once the reversal is well confirmed there, that will have strong implications for currencies and gold.
After taking a much closer look at gold as part of the Q&A session of our webinar today, it became pretty apparent to me that while gold very well may top out somewhere near recent highs, it's entirely possible we can see an "expanded flat" retracement pattern on gold which would take prices modestly above their $1007 highs before the more major C wave lower that will take prices back below $700 before bottoming out. If an advance past $1000 does occur though, and it is more impulsive in nature, that could mean the entire longer term wave count is off somehow and we'll re-examine it for alternatives. For the news Friday:
0700 CAD Employment (-36.5 expected) - Last month's huge positive deviation created a surprisingly small selloff in the USD/CAD. On the one hand it seems as though CAD levels after news events have been frequently manipulated; however, CAD Employment is usually a very reliable indicator and one bad month shouldn't completely force us to sit on our hands here. A comprimise of trading a wider trigger than usual seems appropriate.
If it comes out at 0.0K or higher, USD/CAD should sell off 50 pips
If it comes out at -62K or lower, USD/CAD should rally 40+ pips
0830 US Nonfarm Payrolls (-520K expected) - We have not seen very large deviations on this report since December 2008. Because of that, we've gotten a lot of strange price action on the smaller deviations primarily due to large order flows that tend to follow this release. I recommend trading a wide 100K trigger and if it comes out closer to expected than that, or if there's a conflict with Unemployment Rate, avoid taking long directional trades and simply look to scalp sell rallies and scalp buy sell offs into support. Because we've seen some clear decoupling of EUR/USD, USD/JPY and EUR/JPY, it's hard to say which pair will have the best reaction on the news. My best guess is USD/JPY will be best for a quick news spike pop, but EUR/JPY will have the deepest, most sustainable move.
If it comes out at -420K or higher, EUR/JPY should rally 50+ pips
If it comes out at -620K or lower, EUR/JPY should sell off 50+ pips
