Wednesday June 16, 2004 - 11:55:25 GMT
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Euro mired between 100 and 200-day SMA
Daily Forex Technical Report 6-15-2004
· Euro mired between 100 and 200-day SMA
· 50% retracement props Yen
· Inverted Head and Shoulders appears on swiss daily
The EUR/USD remains on bid early in Asia trading. The move comes amid yesterday's brief stall from the previous day's rally from the 1.2050/2100 region. The potential for a move away from the standards set MA's of 100 and 200-day is considerable, but consolidation has dominated Asia trading. Daily studies seem fairly inconclusive but a closer look can provide some guidance. On the 240-minute chart we have the MACD histogram (0.002) stalling above the zero line coupled with the Stochastic slow line (89.5) moving into overbought while creating a head and shoulders formation, however, RSI (60.0) has yet to coincide. We have pivot support coming into play at 1.2113 with more significant pivot support near 1.2055/85. Regression trend lines (1.2190) lie just above present pricing with the 38.2% retracement of 1.2930-1.1760 (1.2205) subsequent to that. The USD/JPY has given up its gains made previously this week confirming a full retracement. Early in Asia trading, however, a consolidation has been the major theme. As it had all last week, the 50% retracement (109.25) has been a major thorn in the side of the bears, as this level just cannot be broken down. Further aiding the support, on the daily scope, the 100 and 200 MA's have fully converged and are near a complete cross over (108.90/109.00) just beyond the revered 50% Fib level. As we had indicated yesterday, the GBP/USD daily candles gave the bulls all the evidence needed to employ a "buy on the dips" strategy and further prolong the most recent bull trend. The 100-day MA (1.8125) slithers just below current pricing and should provide support. 1.8415 has been eyed as local resistance by the daily pivots table with more significant psychological resistance at 1.8500. Spanning approximately one month, the USD/CHF begun to form a fairly misshapen, but still evident inverted head (1.2320) and shoulders (1.2450 or "neckline"). The formation is considered to be very bullish and coincides with the oscillators and regression trend studies. The daily MACD and MACD histogram are sloped up and the Stochastic has driven out of oversold. In addition, RSI floats up from lows near oversold.
USD/CHF failed to hold the uptrend and is now slightly bearish since we are below the 200 SMA and the former breakout level. Aggressive bears will step in at 2920/50 in order to exploit a strong Fibo confluence (38.2% Fibo from the Sep - Jan bear wave & 50% Fibo from the Nov - Jan bear wave). Another solid R is to be found at 3100/3130 thanks to the 20 EMA and 50 SMA. Finally another decent risk to reward area is 3220/70 where the 50% Fibo from the Sep - Jan bear wave is present. A break above would open the door to 3450/3500 and the 61.8% Fibo from the Sep - Jan bear wave. Reversal bulls will probably try to get in at 2620/70 thanks to a robust Fibo confluence (76.4% Fibo from the 95 - 01 bull wave & 50% Fibo from the Jun - May bull wave) and the Low BB. If the area cracks 2200 and the 7 years low will be the next stop.
USD/CHF remains squarely below the 200-day SMA. The bears seem to have run out of steam here but a fresh bout of selling could push the price further still. Recent strength should create an ideal tipping point for sellers to emerge, however, if they fail to represent we could see a moderate updraft followed by consolidation with the 100 and 200-day MA's (2715/2855) providing the ceiling and the 23.6% retracement of 1.4280-1.2140 (1.2645) potentially providing the base. 2280/2350 range is indicative of support on the monthly pivot tables while oscillators have bounced into neutral rather briskly. The MACD has moved above the zero line but has since topped out at a minuscule 0.002 signaling the bulls strength has left a lot to be desired thus far.
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