Tuesday May 4, 2004 - 10:42:50 GMT
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Euro/Dollar approaching psychological level at 1.2000
Daily Technical Outlook 05-04-2004
· EUR/USD approaching psychological level at 1.2000
· USD/JPY closed above the 200-day MA
It was an inside day for EUR/USD with volume drying up in the holiday session. Short-term uptrend remains intact but momentum is lacking for an upside move. Buyers have to be very concerned about the daily downtrend line drawn from February high, currently at major psychological level of 1.2000. Failing to break this level will put pressure firmly on the downside, as bulls must defend the 04/29 breakout low of 1.1805, in an effort to avoid a retest of the YTD low. Positive price action for USD/JPY as the pair continued its streak of higher lows and closed above the 200-day MA. As long as the bulls can defend the 04/29 low of 109.50 they will be able to challenge the YTD high at 112.35. There are still many short sellers looking to sell into this rally, as the run-up from 04/01 had no strong anchor and is very fragile. However the sell-off from 09/16 to 09/22 was just as vulnerable, a new YTD high will trigger a serious short squeeze. Trading range narrowed in GBP/USD with the pair continuing to experience difficulty breaking above the 10-day SMA. Upside will be limited until 1.7810 is taken, a convergence of past three session highs and 38.2% fibo of the Sep - Feb bull wave. Bulls need to penetrate this level before downside pressure reasserts itself, seeking a retest of YTD low at 1.7580. Only a close above 1.7975, high of 04/28 would complete the double bottom and alter the primary downtrend. Bulls defended in the daily uptrend line in USD/CHF before fading away at 1.3040, a convergence of the 200-day SMA and 10-day SMA. Upside outlook remains intact for a new YTD high, although buyers will need serious momentum to reach 1.3100, with several multi-day high's standing in between. On the downside, bulls must defend 04/30 low at 1.2880 to keep the streak of higher lows alive.
Comment from 04/08
On 03/10 Kiwi had a low at 6554 (slightly below our 6560/6000 area). A small reaction to the 6617 high followed on 03/11, 63pts higher. Even though the ST outlook remains negative; the LT situation has not changed much and Kiwi looks strong. A sustained break below 6280/6310 is in fact needed to turn the pair bearish. Range players will try 6720/50 and 6430/50. The first area will attract bears thanks to the ST Trend R, LT Trend R, High BB, 50 SMA and 23.6% Fibo from the Sep - Mar bull wave. The second area will be a good play for bulls. They can try to exploit ST Trendline S and the 61.8% Fibo from the Nov - Mar bull wave - both present at the level. Finally. More conservative bears will wait for 6980/7020 zone, the 23.6% Fibo from the Jan - Feb bull wave.
On 04/14 NZD/USD had a low at 6300 before a rally to the 6485 high on 04/19, 185pts higher. The 6280/6310 was then cleared and the market quickly used the zone as new R (highs between 6294 & 6327 from 04/22 to 04/28) Since we are now below 6280/6310 bears should have the upper hand. 6340/60 will then become a perfect "add on bounce" zone for the bears thanks to the 200 SMA, LT Trend S now R, 20 EMA and a strong Fibo confluence (23.6% Fibo from the Feb - Apr bear wave & 23.6% Fibo from the 00 - 04 bull wave). A sustained breakout above the area would of course give some hopes to the bulls since the only serious R higher would be 6700/30 (High BB and 61.8% Fibo from the Feb - Apr bear wave). Finally, aggressive reversal players might try 6100/30 in order to exploit the Low BB and 38.2% Fibo from the Aug 02 - Feb 04 bull wave.
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