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Gbp/usd 25.01.2008
Technical Analysis Daily: GBP/USD
GBP/USD 1.9782
GBP/USD Open 1.9763 High 1.9844 Low 1.9498 Close 1.9737
First and strong resistance for the Cable today is 1.9890. Next is the top from 28 December at 1.2010, followed by 2.0110, where the 500 day crawling middle line passes. In downward direction support is expected at 1.9630, which is 37.8% correction of the climb 1.9340 - 1.9820. Next is the bottom from Wednesday 1.9480, and 1.9370, where the 100 week crawling middle line passes, which reacted on Tuesday but was not convincingly broken.
Technical resistance levels: 1.9890 1.2010 2.0110
Technical support levels: 1.9630 1.9480 1.9370
Trading range: 1.9770 - 1.9855
Trend: Upward
Buy at 1.9782 SL 1.9750 TP 1.9842
Today we made already +60 pips profit on GBP/USD from the following signal:
6:07 GMT Buy GBP/USD at 1.9776 SL 1.9750 TP 1.9836 TP reached at 7:37 GMT
EUR/USD's rally from 1.4365 extended further to as high as 1.4778 today before turning sideway. Break of 1.4715 cluster resistance holds (61.8% retracement of 1.4921 to 1.4365 at 1.4709) confirms that fall from 1.4921 has completed. Further rally is now expected to be seen to retest 1.4921 high with prospect of retesting 1.4966 record and 1.5 psychological resistance. On the downside, below 1.4508 is needed to indicate rebound from 1.4365 has completed. Otherwise, short term outlook remains bullish.
In the bigger picture, with 1.3581 resistance turned support remains intact, medium term up trend from 1.1639 is still in force. Regardless of internal structure, it is treated as resumption of long term up trend from 0.8223 (00 low) to 1.3668 (04 high) and has just failed 61.8% projection of 0.8223 to 1.3668 from 1.1639 at 1.5004 target which overlaps with 1.5 psychological resistance. Having said that, the current price actions from 1.4966 is treated as consolidation to this long term rally. Though, sustained trading above 1.5 key resistance is needed to confirm the medium term up trend has resumed and bring rally to next projection target of 100% projection at 1.7048. Otherwise, more choppy consolidation could be seen inside established range of 1.4309 and 1.4966.
Gbp/usd 25.01.2008
Cable's rebound from 1.9337 extends further to as high as 1.9847 today. Break of 1.9789 resistance indicate that a short term bottom is in place at 1.9337 with bullish convergence condition in 4 hours MACD and RSI. Further rise should be seen to short term falling channel resistance (now at 1.9902). Break will indicate that whole fall from 2.1161 has completed too and bring stronger rally. On the downside, below 1.9464 support is needed to indicate rise rom 1.9337 has completed. Otherwise, short term outlook remains bullish.
In the bigger picture, prior break of medium term rising channel and 2.0 psychological support at least indicate that rise from 1.8090 has already completed at 2.1161. With 55 weeks EMA taken out too, it's likely that the medium term up trend from 1.7047 has also completed. Deeper medium term decline is expected towards 61.8% retracement at 1.8619.
Though, break of the short term falling channel will indicate that whole decline from 2.1161 has completed. Stronger short term rally should then be seen, probably to retest prior medium term channel support turned resistance (now at 2.0250) before resuming the medium term fall from 2.1161.
USD/CHF recovers mildly after fall from 1.1120 was contained at 1.0846. Nevertheless, further decline is still in favor as long as 1.0990 minor resistance holds. Retest of 1.0836 low is still expected to be seen and break will confirm recent decline from 1.1596 has resumed for next short term target of 61.8% projection of 1.1596 to 1.0836 from 1.1120 at 1.0650 first. However, above 1.0990 will argues that consolidation from 1.0836 is still in progress. Further recovery could be seen to 1.1120 or above. But still, upside is expected to be limited by 1.1189 resistance and bring fall resumption.
In the bigger picture, whole down trend from 1.3283 (05 high) is still in force. The preferred interpretation is that fall from 1.3282 was initially contained at 1.1919 and turned into sideway triangle consolidation that completed at 1.2467, where the medium term down trend from 1.3283 resumed . Having said that, next medium term downside target will be 161.8% projection of 1.3283 to 1.1919 from 1.2467 at 1.0260. Also, such medium term decline is tentatively treated as resumption of the long term down trend from 1.8305 (00 high) which could extend further to parity.
On the upside, though, above 1.1189 resistance will firstly argue that fall from 1.1596 has completed. Secondly, it will suggest that consolidation from 1.0890 is still in progress and further rise could be seen to retest 1.1596 high before completion. But still, break of 1.1596 is needed to indicate such down trend from 1.3283 has completed. Otherwise, long term outlook will remain bearish
GBP/JPY's rise from 204.49 extends further to as high as 213.65 so far. Break of 212.44 resistance indicates that a short term bottom is in place at 204.49, with bullish convergence condition in 4 hours MACD and RSI, after drawing support from double channel support. Further rise should now be seen to retest inner channel resistance (now at 219.11) first. On the downside, it will take a break of 207.05 to indicate rise from 204.49 has completed. Otherwise, short term outlook will remain bullish for the moment.
In the bigger picture, an important medium term top is formed at 251.09 after completion of a medium term head and should top pattern (ls: 241.47, h: 251.09, rs: 241.35), with the medium term trend line support taken out too. In other words, the whole up trend from 148.19 should have ended at 251.09 already and deeper medium term decline should be seen to psychological support at 200, which overlaps with next medium term fibo support of 50% retracement of 148.19 (006) to 251.09 (07 high) at 199.64.
However, break of the mentioned inner channel resistance will firstly indicate that fall from 241.35 has completed. Secondly, it will alert that whole decline from 251.09 has possibly completed with three waves down to 204.49 too. Medium term outlook will turn neutral first in such case and focus will be back on outer channel resistance (now at 233.76).
USD/JPY's rebound from 104.96 extends further to as high as 107.75 today. Break of 107.37 resistance indicates that decline from 114.77 has made a short term bottom at 104.96 on bullish convergence condition in 4 hours MACD and RSI. Further rally should now be seen towards 110.10 resistance. On the downside,below 105.92 is needed to indicate that rebound from 104.96 has completed. Otherwise, short term outlook will remain bullish.
In the bigger picture, whole medium term down trend from 124.13 remains in force as long as medium term falling trend line resistance (now at 113.41) remains intact. Further decline is still expected, after finishing current correction from 104.96, towards key medium term support zone of 101.22/65 level. However, since the structure of the fall from 124.13 is not clearly impulsive yet, the fall from 124.13 might only be part of a wide range consolidation pattern only and 101.22/65 key support might hold. Much attention will be paid there on sign of reversal as USD/JPY approaches this key support zone.
EUR/JPY's rally from 152.11 extends further to as high as 158.93 today. Break of 157.77 cluster resistance (38.2% retracement of 166.64 to 152.11 at 157.65) as well as the short term falling trend line indicates that fall from 166.64 has completed. Also, the correction pattern from 167.72 should have completed at 152.11 too. Further rally should now be seen to 61.8 retracement of 166.64 to 152.11 at 161.08 first. Break will encourage retest of 166.64 high.
In the bigger picture, EUR/JPY has turned into large scale sideway consolidation after reaching 168.93. Stronger rebound from the long term channel support (now at 153.68) suggests that long term up trend rom 88.97 (98 low) is still in force). Focus is now back to 168.93 high and sustained break of this resistance is needed to confirm that long term up trend has resumed. Otherwise, further choppy consolidation could still be seen.
On the downside, while some interim pull back could be seen in the rise from 152.11, break of 154.83 support is needed to indicate such rally has completed. Otherwise, short term outlook will remain bullish for a retest of the upper end of the range of 149.27 and 168.93 first.
USD/CAD's fall from 1.0378 continues as expected and reaches as low as 1.0143 so far. At this point, further pull back is still expected as long as 1.0256 resistance holds. However, downside should be contained well above 0.9971 resistance turned support and bring rally resumption. As discussed before, the current rise from 0.9756, which is treated as resumption of the whole rally from 0.9058 is still expected to extend to 61.8% projection of 0.9056 to 1.0248 from 0.9756 at 1.0493. Above 1.0256 will bring retest of 1.0378 high first.
In the bigger picture, a medium term bottom is in place at 0.9056 after USD/CAD just missed double projection target of 161.8% projection of 1.4006 to 1.1716 from 1.2737 at 0.9032 and 161.8% projection of 1.2737 to 1.0930 from 1.1874 at 0.8950. Nevertheless, the current rise from 0.9056 is still treated as correction to the long term down trend for the moment. Strong resistance should be seen as USD/CAD approaches key medium term resistance of 1.0930, with 100% projection of 0.9056 to 1.0248 from 0.9756 at 1.0948, 38.2% retracement of 1.4006 to 0.9056 at 1.0947 and 50% retracement of 1.2737 to 0.9056 at 1.0897. Attention will be paid to reversal signal as USD/CAD approaches this resistance zone. On the downside, break of 0.9971 to needed to be the first alert that rise from 0.9056 has completed. Otherwise, short term outlook remains bullish.
Dollar Yen Approaches 108 As Nikkei Skyrockets, But Danger Ahead in US
Talking Points
Japanese Yen: Propels to nearly 108 as Nikkei has biggest rise in months
Euro: Bid all the way to 4780 but consumer data disappoints
British Pound: Trades off the 198.00 level after bank calls for 125bp of easing in 2008
Canadian Dollar: CPI data on tap
US Dollar: No data today
Risk appetite returned with a vengeance in the currency market tonight as Nikkei skyrocketed by more than 500 points helping to propel USDJPY to within 10 points of the 108 level. Investors in Asia were encouraged by the rebound in equity prices in Europe and US over the past two days after the Fed's emergency inter-meeting rate cut of 75bp on Tuesday.
With little key data on the economic calendar this week currency markets have been trading in tandem with the equities. Carry trades fell when equities crashed and rose when stock rebounded tracing out rollercoaster price action all week long. The economic picture remains unclear as traders still debate whether US will enter a full blown recession or merely experience a temporary slowdown. Yesterday's weekly jobless claims were encouraging printing at 301k well below our threshold of 350K and indicate that at least for the moment the labor markets are not seeing any material deterioration in demand.
On the economic front the European data was mixed today with German consumer confidence printing better than forecast at 4.5 vs. 4.3 but nevertheless hitting a 2 year low while Italian Retail sales slipped into negative territory registering a contraction of -0.3% on a month over month basis. The negative effects of the global credit crunch are slowly seeping into the real economy in the Euro-zone and should turbulence persist, consumer demand may weaken significantly, undermining ECB's hawkish outlook. For the time being however, European monetary authorities continue to err on the side of inflation maintaining a restrictive policy.
With no US economic data on the docket currency markets will look to equities to set the tone once again and today's early gains in the carry trades and the high yielders could come under pressure if US stocks sell off. After two strong days of gains, equity traders may run into the case of buyer remorse, choosing to take their profits ahead of the weekend. Should stocks falter expect the EURUSD and GBPUSD to do the same as risk aversion/risk assumption remains the only game in town.
Eurusd 25.01.2008
Bounce from 1.4366, 22 Jan low, reached 1.4683 on 23 Jan, ahead of pullback that left a higher low at 1.4511. Fresh strength emerged from there cleared 1.4683 resistance, to reach a fresh high of 1.4779. Correction lower is underway, with positive near-term outlook, expected to leave a higher low at 1.4640 area, before fresh push higher. Lift above 1.4779 will expose 1.4820/35, possibly 1.4860.
Res: 1.4779, 1.4795, 1.4820, 1.4835
Sup: 1.4683, 1.4640, 1.4620, 1.4590