Friday April 23, 2004 - 15:22:10 GMT
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Japanese Yen - Dollar/Yen indicates a short-term top
· Doji on USD/JPY indicates a short-term top
· USD/CHF retreating to 200-day SMA
A moderate rally on EUR/USD as the pair bounced off its lower Bollinger. A confluence of the 200-day SMA, 200-day EMA and 10-day SMA provides solid resistance at 1.1930-1.1955 area, although bulls won't be able to send a strong message until they regain 1.2080 high of 04/19. Only then they can snap the 2-month streak of lower highs, and have any real hope of denying the bears a retest of YTD low at 1.1780. (See Chart of the Day for further analysis) After a 3-day run up, the Doji on USD/JPY indicated a short-term top and the pair will need some time digesting its gains with the stochastic in overbought range. There is strong resistance at major psychological level of 110.00, the 200-day EMA, followed by a convergence of the 200-day SMA and upper Bollinger at 110.40. While the trend remains strong, bulls need to stay aggressive by defending 108.95, where 61.8% fibo can provide the first line of defense. Below that, a strong combination of the 50-day SMA and 50% fibo at 107.85 should keep the bears at bay. It was a minor rally on GBP/USD with the pair dropping a Hammer on lower Bollinger. Bulls can take advantage of the oversold short-term technicals and make a run-up to 1.7865, a convergence of the 50.0% fibo and the 04/21 high. A new YTD low on the other hand, will trigger a test of the 200-day EMA at 1.7545. The overall trend remains heavily bearish. We saw some profit taking today in USD/CHF as the pair retreated to its 200-day SMA. Buyers looking to buy dips will likely defend the pair near major psychological level of 130, where the 200-day EMA and 10-day SMA can also be found. The overall outlook remains strong and a retest of 1.3200-1.3220 (11/25 and 04/22 high) is expected in the near future.
Comment from 03/17
On 01/30 the EZ currency had a low at 2351 (slightly above our 2250/2300 area) and then rallied 579 pts higher to the 2930 High on 02/18 (slightly below our 2950/3000 area). It is also worth noting that the 2727 High offered intermediate resistance on 02/06 (the pair found a low at 2602,125pts lower on 02/07). From the 2930 high, the cross collapsed 874 pts lower to the 2056 low a few days back. Today an obvious dynamic triangle gives a neutral outlook to the pair. Volatility is bound to increase in the following days. Since we are sitting on strong S, a slight bullish bias is however present. Bulls could in fact step in the 2100/20 area to exploit the LT Trend S and strong Fibo confluence (23.6% Fibo from the Sep02 - 04 bull wave & 38.2% Fibo from the Sep - Feb bull wave). Below, tremendous S is to be found between the 1900 and the 2000 levels. The zone is the former breakout pt now S, 23.6% Fibo from the 02 - 04 bull wave, low BB and 200 SMA. Bears will probably stay on the sidelines for now but 2 areas are quite attractive: 2480/2500 the former S now R will be strengthened by the 23.6% Fibo from the Sep Feb bull wave while 2950/3000 is still an obvious play thanks to the LT Trend R and swing high.
On 03/18 the EZ currency had a high at 2435 (below the 2480/2500 zone) and found S a couple of days later on the 03/29 Low at 2046 (slightly below our 2100/20 zone). A quick rally occurred the following days. EURUSD is now in a downtrend but now reaching critical S. As a result, reversal players will step in at 1720/50 the 50% Fibo from the Mar03 - Mar 04 bull wave and Low BB. Only serious S below is 1.1400 the 76.2% Fibo from the Mar 03 - Mar 04 bull wave. Bears will add on bounces at 2150/2200 (50 SMA and 38.2% Fibo from the Feb - April bear wave). A break there would open the door to 1.2550/2600 where bears might step in to exploit the 38.2% Fibo from the Nov - Feb bull wave.
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