Monday May 17, 2004 - 08:11:25 GMT
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British Pound- 10-Day EMA Caps Gains
Daily Forex Technical Report 05-17-2004
· 10 Day EMA Caps Gains in British Pound
· Dollar Swiss Fails at 200-Day EMA
Bulls will be relieved that the 4/26 low at 1.1760 is providing a short-term base for the EURUSD. Immediate resistance comes in at 1.1975, the 200-day SMA. However, rallies should be viewed as corrective as the pair remains in a medium-term bear channel. Bears will be looking to reinitiate short positions on rallies towards the moving average confluence / upper Bollinger and 50% fibo of the Sept-Feb rally between 1.1970-1.2100. Bulls will find attractive risk reward on dips towards range support and the 23.6% fibo of the 2000-2004 bull wave at 1.1800, but a break and close below 1.1760 would be needed to expose the lower Bollinger at 1.1735 and give shorts a chance to target 1.1590, the 61.8% retracement of the Sept-Feb rally. A recovery above 1.2180, the 3/5 high still needs to occur before bearish momentum is negated. The rally in USDJPY has stalled right below the former support turned resistance and 5/3 low at 115. With oscillators in overbought territory and a break below Friday's low at 113.94, bears may look to take advantage of a further retracement towards the 5/12 low at 112.42. A break and close below this level would be needed to give bulls any reason for concern. Immediate resistance is at 114.60, the neckline resistance and 50% fibo retracement of 125.79-103.40. A move above 115 immediately exposes 116, the 138.2% fibo from the Mar bear wave and 120 July highs. Although the GBPUSD remains trapped between the 10 & 200-day EMA, the short-term descending triangle on the daily within a major bear channel from the 2/18 1.9143 high suggests that gains should be limited. Bears will look to sell on rallies toward the 10 & 20-day SMA, or on a break of Friday's low and the 200-day SMA at 1.7450 to target 1.7375, the 38.2% fibo of 1.5614-1.9137. Bulls can take advantage of some near term gains towards 1.80, on a move above 1.7800, the 5/12 high and 20-day EMA. However, a close above the head & shoulders neckline at 1.80 would be needed to reverse the overall bearish sentiment. After closing below the 38.2% fibo of the Aug-Jan bear wave and the 10 & 20-day EMAs, USDCHF is now flirting with more meaningful support at 1.2875, the 5/12 low and 50-day SMA. With bears holding the upper hand over the short-term, trendline support and the lower Bollinger awaits below at 1.2765, followed by the 100-day SMA at 1.2677. A close above 1.3100 would negate short-term bearish momentum and give bulls an opportunity to target a move towards 1.3200, the 50% fibo of Aug-Jan bear wave / upper Bollinger and 1.3230, the 4/26 high.
Comment from 04/19
On 03/09 GBPJPY broke the 205 level and ended up on the 189.61 Low on 03/31, 1539pts lower. In this down-move the pair had a quick halt to 198.49, the low on 03/11. The cross briefly rallied to 200.98, the 03/12 high 249pts higher. The outlook is slightly negative now since we broke the MT trend S and seem to be in the middle of a typical breakout/retracement pattern. The pattern is not totally clear though and strong S is ahead. As a result, aggressive bears will play the breakout/retracement at 195.80/196.30 thanks to the MT Trend S now R, range R and 38.2% Fibo from the Mar bear wave. If 198.00 (50 SMA and High BB) is taken clearly, the level will become S and the outlook will turn positive for the Sterling. 208.50/209 will then be the next entry for the bears thanks to the MT trend R and key 50% Fibo from the 90 - 95 bear wave. Below key S is to be found at 188.80/189.30. Bulls will wait for the area to exploit the Low BB and 50% Fibo from the Sep01 - Mar04 bull wave.
On 04/20 GBPJPY had a high at 196.74 (above our 195.80/96.30 area) and retraced to the 192.42 Low a couple of days later, 432pts lower. The cross then broke the 198 level (5/07). A typical breakout retracement occurred (low at 197.87 on 05/12) and then the pair rallied. The outlook is now clearly positive since 207.50/208.20 is the only serious R ahead. Aggressive bears might try to exploit the High BB at 203.00/50 but 207.50/208.20 and the current swing high is the only robust R. Below, bulls will concentrate on 197.00/40 (20 EMA and robust Fibo confluence (38.2% Fibo from the Sep - Mar Bull wave & 38.2% Fibo from the 02 - 04 bull wave). Bulls will also keep in mind the 189.20/80 zone thanks to the Low BB and 61.8% Fibo from the Sep - Mar bull wave.
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