Thursday January 13, 2005 - 10:28:00 GMT
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EUR/USD: A giant green candle cropped up on the intra-session 240-minute candle, retracing 38.2% of this years range before the bid met a hefty barrier at 1.3290. The move dragged the pair over the 10-day SMA, where it has since become relatively flat. The move was momentous however, and it seems some more upside potential may be in the deck. One indication of such is the 240-minute RSI failing to move into overbought on the rally – often an indication of a continuation. Additionally, daily studies remain near oversold – only now inching to neutral following the sudden 200-pip rally. We have found little conclusive technical evidence on weather the pair is likely to make a touch and go from the 10day SMA (1.3180/3210) region or just move straight up from here; though we favor the former based on flow analysis primarily. Additionally, we feel the 50% (1.3345/50) is the next region likely to stymie the offer, given it intersects the descending trendline connecting December’s highs and the 20-day SMA at this moment in time.
Key levels: On the resistance side we have laid out fib retracements using proprietary technique. These levels combined with the larger scale fibs peg key resistance at 1.3345/50 and 1.3420. As we noted yesterday, “…a break of 1.3230 (10-day SMA) will likely open the door to the 1.3290 echelon….”, and we feel the validation confirmed when price stalled at this precise level is enough reason to leave it on our charts. 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. Ultra near term support however comes in at and scattered around the 3200 figure.
USD/JPY: As we noted yesterday, ”…[we see] support at present pricing with a break clearly opening up a considerable move lower…”, and shortly after the level broke down opening the door to the level we went on to note in the key levels portion of yesterday’s report as notable (0102.25/50), where it presently trades. Taking this price action into consideration, we surmise a barrier has been chiseled out at the 102 handle with a break likely bringing parity back into the picture. Daily oscillators favor oversold, but remain sloped lower.
Key levels: The confluence of the 61.8% of December’s range (50% of recent range) and converging 10/20-day SMA (103.75) above appear to be a formidable barrier for the bid; though the
76.4 come into play at 103.00 and could create a sticking point. The 104 figure is also rather formidable, as a stall there would create a large H&S formation. On the support side, the 102.00/25 monthly lows remain critical for the bid with a break likely creating more stop cascading like that seen
GBP/USD: It appears our observation of a doji harami on the daily GMT chart creating a support level at 1.8735 was spot on accurate. We went on to note that beleaguered price action suggests some “buy on the dip momentum is present and very active at these respective levels”, and now – with the benefit of hindsight – we were clearly accurate in our forecast. In terms of percentage the rally wasn’t nearly as virile as that seen in the EUR as indicated by EUR/GBP rising too during the session. Going forward, as we noted above, the bid feels soft and slip back down to support we feel is likely if the dollar manages to scrap back to EUR 1.3200ish.
Key levels: On the support side, the former resistance, now support comes in near the range highs of 8900 and the 10–day SMA 1.8820 thereafter. A breach of the region will open the floor up to the 8700/30 echelon. As for resistance, the descending 20day SMA comes in at 1.9030 with session spike and closing highs at 1.9105/35 thereafter.
USD/CHF: As we noted yesterday, “…[USD/CHF] looks ripe for a reversal as we round the bend of the weekly close. The daily GMT reveals a doji/hanging man formation, which looks rather ominous given the price action that immediately precedes it. The formation appears just below the 100-day EMA and is accompanied by overbought RSI, Stochs’ and a converging MACD. All in all, the factors imply a large move is impending….”, and it appears our forecast bestowed a great deal of utility given the last 24-hours of price action.
Key levels: Going forward, we have key support coming into play at (1600/25) the 4 year old trendline. Subsequent to that level we have a barrier at (1.1515/25) the 20-day SMA and the projection studies concur. Resistance is scattered with (1.1710/15) the 10day SMA the first major barrier with monthly highs (1.1825/50) thereafter. In the event of a major break however, 1.1975 has been eyed as a critical echelon. Conversely, a considerable move lower is likely to stall near the 1400 figure.
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