Tuesday June 29, 2004 - 11:24:45 GMT
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FOREX: Yen enjoys healthy bid tone; MACD nearing crossover as pair runs into 200-day SMA
Daily Forex Technical Report 6-29-2004
· Euro spirals into apex
· Yen enjoys healthy bid tone; MACD nearing crossover as pair runs into 200-day SMA
The EUR/USD continues to spiral into the triangle formation with a brief foray out of the formation late in London trading. This fact has rendered most technical studies rather null. The MACD histogram (.0008) has wound into a tight whipsawing range and RSI (53.15) aimlessly wanders through neutral territory. A flagging pattern complete with pole and pennant can be seen on the daily with the pole forming at the onset of the collapse from the 50% retracement of 1.2930-1.1765 (1.2345). The 38.2% retracement of 1.0800-1.2930 (1.2120) coupled with the intraday pivot (S1) has set a boundary on the support side with the descending side of the triangle creating resistance.
The USD/JPY continues to enjoy a solid bid tone throughout Asia trading. The pair rushed through the 61.8% retracement of 103.45-115.00 (107.85) and is presently testing the fortitude of the 200-day SMA (108. 60) and the regression trendline lower band (108.65/85). The 50% retracement of 103.45-115.00 (109.20) seems daunting for the bulls however, as the level created various instances of support and resistance throughout the month of June and early May. Oversold readings on the daily scope have begun to subside while the intra-day (240-minute) time frame has drifted into overbought.
GBP/USD has dropped like a rock as London traders give rise to the benchmark currency. The 38.2% retracement of 1.9125-1.17490 and intra-day lows made on 6/14 and 6/24 (1.8115) have been eyed as the next significant level on the support side. Just below at 1.8082 we have a confluence of the 100-day EMA and the monthly pivot level and we think the test and/or consequent result of this level will be noteworthy. A breakdown is most likely, given other various indicators and recent bearishness, and could add to recent bearishness clearing the way down to the 100-day EMA and the monthly pivot level (1.8070/85).
The USD/CHF leads the majors in percent gain late in Asia trading leaving us glued to the news wire. Perhaps the strength of the bulls is due in part to the inverted head and shoulders or maybe it was the fact that the pair trades well below the 100 and 200-day MA's. Either way we have been very fortunate to have made these observation for nearly a week now. Intra-day pivot tables are indicative of resistance near 1.2610 while our proprietary S/R levels essentially concur (1.2617). Daily oscillators have begun to ascend significantly, but have yet to reach oversold. Additionally, the MACD histogram (0.001) has failed a close attempt to cross lower indicating bulls have come in with great force.
Comment from 06/02
On 04/26 the EZ currency had a low at 1759 (slightly above our 1720/50 area) before a rally to the 2182 high on 05/05, 423pts higher. The cross fell once again in the 1700 area (low at 1771 on 05/13, 411pts lower) and rallied to the 2300 high a couple of days ago. Today the EURUSD outlook is certainly positive but the single currency needs to confirm its renewed strength. Multi lows above 2200 are required. For now, aggressive players will play the range. 2130/50 will attract bulls thanks to the 38.2% Fibo from the Feb - Apr bear wave and the 10 SMA while 2320/50 will attract bears thanks to the 100 SMA, High BB and 50% Fibo from the Feb - Apr bear wave. More conservative bulls will wait for 1880/1910 in order to exploit the 76.4% Fibo from the 02 - 04 bull wave. A breakout below would then open the door to 1700/50 (50% Fibo from the Mar 03 - Mar 04 bull wave and Low BB). Finally conservative bears will keep in mind the 61.8% Fibo from the Feb - Apr bear wave at the 2450/2500 level.
On 06/04 the EZ currency had a low at 2136 before a quick rally to the 2356 High on 06/08 (slightly above our 2320/50 area) - 220pts higher. The Euro did not keep its momentum and fell back to the 1953 Low on 06/14 (well above our 1880/1910 S zone). The outlook is still certainly bullish but the EZ currency needs to establish a base above 2200 before higher levels can be reached. The current consolidation made of higher lows confirms the bulls' case but aggressive bears will try once again to play a reversal at 2240/80 in order to exploit the 150% Fibo from the 99 - 01 bear wave. More conservative bears will wait higher to catch the post breakout momentum at 2350/2400 thanks to the High BB and 50% Fibo from the Feb - May bear wave. Bulls will wait for 2200 to be broken and will add on retracement to the zone. Lower, they will also have 2 areas to consider: the aggressive 2000/30 and the more conservative 1910/60. 2000/30 is the 50 SMA and 23.6% Fibo from the Feb - May bear wave. 1910/60 is the Low BB and a decent Fibo confluence (23.6% Fibo from the 02 - 04 bull wave & 61.8% Fibo from the Nov - Mar bull wave)
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