Thursday May 17, 2007 - 12:21:57 GMT
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FX Thoughts for the Day - www.fxthoughts.com
FX Thoughts for the day - Evening - 17-May-2007....1158 GMT
EURO, JAP YEN and EURO-YEN
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Our comments on Dollar-Swiss, Sterling Pound and Australian Dollar are given below
USD-CHF @ 1.2238/43.‚Ä¶‚Ä¶Important Support at 1.2200.
R: 1.2250 / 1.2277-85
S: 1.2230 / 1.2200 / 1.2180
USD-CHF has been moving up for the last 3 weeks after having found a medium-term bottom at 1.1994 at the end of April. The 1.1994 level falls on a trendline joining the Lows at 1.1285 (Dec-04) and 1.1880 (Dec-06) on the Monthly Candles. It is a very strong and very crucial Support now and while it holds, there are good chances of a rise towards 1.2376 this month. In case the market rises past 1.2376 (either this month or the next), it could well move further up towards 1.2550 and 1.2770 in the months ahead.
Currently the pair is sustaining above 1.2200 and there are changes that the pair may test 1.2285 while above that. It would be important to see what happens at that point of time. A move above 1.2285 may indicate that the pair is headed towards 1.2355, which comes on a trendline on the monthly charts joining the highs of 1.3232 (Mar-06) and 1.2555 (Feb-07).
Today the pair is trying to move above its important Resistance of 1.2250 and a move above that opens up a rally towards 1.2285, the Apr-07 high. It should be noted that the statistically projected Max High for the day is at 1.2277. On the downside the Support for the day is at 1.2230 and then at 1.2200. A break below that may produce a dip towards 1.2170. The bias currently is positive while the pair sustains above 1.2200.
GBP-USD @ 1.9771/73...Support at 1.9740-20
R: 1.9791 / 1.9820
S: 1.9750 / 1.9727-30 / 1.9695-90
GBP-USD had a sharp fall yesterday and pair is currently trading near an important level of 1.9750. Unless the market rises past 1.9835, preferably today, or at the most by tomorrow, it would be vulnerable to a break below 1.9720-00. Such a break could cause a fall towards 1.9600.
Subsequent to the 25bp rate hike by the BOE last Thursday, there is a lot of expectation of an even further rate hike in the market. This is reflected in the wide gap between the GBP Libor and the BOE Interest Rate (please click on
http://www.kshitij.com/utilities/funcharts/ukboe.shtml). As such, in case a fall to 1.96 indeed takes place, it might present a good buying opportunity for the medium term.
However for today, there is a good Support nearby at 1.9727-30, which is coming in on the trendline on the 4-Hourly, joining the lows of 1.9865 (27-Apr) and 1.9746 (15-May). Further, the statistically projected Max Low for the day is at 1.9695, so we would caution of a sharp pullback.
On the upside for the day the Resistance is at 1.9791, the high so far. Above that the Resistance is at 1.9820. We are staying out currently.
AUD-USD @ 0.8237/41‚Ä¶‚Ä¶.Staying out
R: 0.8270-75 / 0.8300
S: 0.8230 / 0.8210 / 0.8195
Looking at the Monthly chart, AUD-USD gained sharply in Feb, Mar and April this year and the pair topped out at 0.8396 in April. The pair has been subsequently consolidating this month. The consolidation could last for further couple of months before the pair once again tries to begin its longer-term uptrend. Within the expected consolidation the pair may even dip towards 0.8065 in an extreme case, the April-2007 low. It should be noted that 0.8000 was the breakout point for the pair to a 17-year high earlier during the year. As such, a break below 0.8000 is unexpected for the remaining part of the year. The 200-MA is currently at 0.7831 and is moving up by 3 pips per day. That is expected to catch up with the price in the next few months. On the upside a break above 0.8400 would be required to once again begin the larger uptrend in the pair.
On the shorter-term time frame, the trend could be turning down. The trendline support at 0.8235 on the trendline joining Lows at 0.7680 (06-Mar) and 0.8170 (07-May) on the Daily Candles is in danger of breaking. A fall below 0.8230-25 today (if seen), could take the market down towards 0.8195, the projected Max Low for the day. Below that the next target would be 0.8170-60.
While the market remains above 0.8223 today (projected Max Low on the Weekly chart), we could see a bounce towards 0.8290. Above that, there is Resistance at 0.8309, the projected Max High for the day.
As a Range Trader, one may look to buy near 0.8223 with a Stop Loss below 0.8190. Else, as a Trend Trader, one may either look to sell on a Limit basis near 0.8290 with a Stop Loss above 0.8310, or sell on a Stop Loss basis near 0.8210, with an SL above 0.8240. We are staying out.
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