Friday May 20, 2005 - 08:47:39 GMT
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FX Daily Strategy Analysis
EURUSD: It seems unable to break the dead-lock between 1.2600 / 1.2660 and it looks like we can shelve this week as a non-event. As long as we remain in the wider range of 1.2580 /85 double-bottom and 1.2710/15 1st retracement-level, we shall continue to range-play with a bias to the downside. While 1.2770 remains key level for the week and a close bellow it will keep the bearish outlook on EURUSD intact, I note that the 2-week bearish trend-line has caught up with the market and corresponds with the 1.2715 resistance level.
GBPUSD: Very quiet, range of 1.8340 / 80 only this morning. For all fans of exquisite chart formations, we are in the process of completing an inverse head shoulder formation with neckline at 1.8410. (first shoulder 1.8340 on ma17y, head at 1.8300 may18, 2nd shoulder 1.8340 this early morning). Expect immediate retracement to the 1.8410 neckline and – in a few hours – a break to the upside for 1.8500 target-level, 1.8525 is 1st retracement of last weeks strong fall from 1.89 and will probably hold. On a weekly scale, any close bellow 1.84 calls for more downside next week, target 1.8050, closing the week higher, should stop the slide and see a week of consolidation between 1.84 and 1.8660.
USDJPY: Consolidation continues this morning with 107.75 resistances holding for the third time in as many days. The triangle is narrowing with support up at 107.10, expect the pair to hold steady between these levels. Further strong support can be found at 106.80, 106.45 and I’d expect the next move to be a break on top with room to 109.00 the high of April.
USDCHF: Not much has changed, 1.2160 / 1.2260 on the wide, in a slow market we could hold inside 1.2200 / 1.2240 and for now I still uphold my view of a stronger dollar with a spike to 1.2380. With a close bellow 1.2280, next week should see some consolidation with risk to fall back to 1.2000 before a new attempt to continue the dollar-rally, but if we do get a last-minute rally today then our eyes will turn up to reach 1.28 and initial target of 1.2525.
09:30 GMT: UK M4 April
17:30 GMT: US Greenspan speaks on Energy
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