Wednesday January 12, 2005 - 09:11:17 GMT
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ACM REFCO - www.ac-markets.com
FX Daily Technical Strategy
EUR/USD: An eerie calm has taken hold of the FX market over the past 48-hours, as most pairs and crosses trade in a tight range. The most liquid pair is no exception, but the EUR did manage to make a modest run at the former support turned resistance (1.3150). Following the failure, EUR collapsed to the 3100 figure, where it has made a pretty soft landing going into the European open. We remain confident in reaffirming yesterday’s sentiment in that, “…a slip of support to the next figure below (1.3000) or perhaps key fib support thereafter (1.2960) may be in the deck before this weekly session comes to a close. We feel a failure to trade below the former all time high (1.2935/60) region will be a strong sign of a continuation in the trend higher. Contrarily, a slow meandering toil into the region should be cause for concern for trend players….”
Key levels: On the resistance side of things, we have laid out fib retracements using recent ranges. These levels combined with the larger scale fibs and peg key resistance at 1.3175/3200 with daily session highs prior to that. We fell a break of 1.3230 (10-day SMA) will likely open the door to the 1.3290 echelon. Subsequent to that, more levels of resistance come in near the 20-day SMA descending slightly overhead (1.3390). On the support side of the picture, former all time highs (1.2935/60) seem to be a likely barrier with Friday’s spike lows 1.3025 as probable regions of support prior to that.
USD/JPY: A discreet bid met the offer head on yesterday following the sizable move from the shoulder range of the H&S formation that we exemplified for three days now. The collision came at the confluence of the descending trendline connecting Dec highs, also duly noted by us, and a key fib level at 103.25. We see continued support at present pricing with a break clearly opening up a considerable move lower.
Key levels: The confluence of the 61.8% of December’s range and converging 10/20-day SMA (103.75) above appear to be a formidable barrier for the bid. The 104 figure thereafter is also rather formidable, as a stall there would create a large H&S. On the support side, the descending trendline connecting December’s spike highs shortly thereafter (103.20/45) is notable for the offer, with a break opening
GBP/USD: A doji harami appeared on the daily GMT chart at a key fib retracement level earlier this week, creating what is now clearly a support level at 1.8735. The intra-session price patterns reveal a relentless bid that strides higher only to slip back to fresh lows - where it regains footing then bids again. We feel the beleaguered price action suggests some buy on the dip momentum is present and very active at these respective levels. 1.8620 appears to be the line in the sand the bid refuse to concede. A break above 1.8820 is critical for the pair to break the near-term trend of successive lower highs and lows. The 10-day SMA is descending into the picture and should intersect price in the next 24-hours.
Key levels: On the resistance side, the former support, now resistance comes in near the range highs of 8900 and the 1.9000 figure thereafter. A break opening up the door to the diverging 10 and 20-day SMA (1.9175/1.9234) subsequent to that. On the support side, similarly to the EUR, session lows are the most formidable for the offer with a break opening up the doors to 1.8630 fib projection.
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