EUR/USD â,“ The euro exploded through resistance levels yesterday, gaining over 170 pips before coming to a halt at the upper Bollinger band (1.2287) on the daily charts. This is the second break above the 1.2200 figure in the last three weeks but whether breakout holds remains to be seen. Hourly oscillators are falling from the expectedly extreme overbought levels and thus suggest consolidation / contra moves of todayâ,"s move. The 23.6% fibo of this recent 1.2068-1.2287 move serves as initial support at 1.2236 with a break targeting the 38.2% fibo at 1.2203, just above the psychological 1.2200. A resistance zone bound by the 4/6 high / 38.2% fibo of 1.3478-1.1640 at 1.2331/42 challenges additional gains with a break above favoring strength until the 50% fibo of 1.3478-1.1640 at 1.2558.
USD/JPY â,“ The Yen also gained versus the US dollar, closing below 118.00 on a daily basis for the first time since 4/6 and finding support at the confluence of the 50 day SMA / 38.2% fibo of 115.49-118.87 at 117.58/60. The bullish ascending triangle is still valid and the pair sits right at the short term trendline that began on 3/20 at 115.49. The proximity of the trendline does present opportunities to bulls, especially when considering the recent ranging nature of the market. Immediate resistance waits at the 38.2% fibo of 118.82-117.51 at the psychological 118.00 figure with further strength targeting the 618% fibo at 118.32. A break of yesterdayâ,"s high at 118.62 facilitates a move to the 3/13 high at 119.18. A continuation of todayâ,"s losses targets the longer term trendline, beginning in May 2005 at 104.20, which sits at 117.00.
GBP/USD â,“ GBP/USD crossed and closed above its 200 day SMA on the daily chart for the first time since 10/21/2004. The price at that times was at 1.8272 and GBP/USD subsequently rallied over 1,000 pips in two months. Such a repeat is possible but not probable, but the crossing and closing above the 200 day SMA can only be viewed as bullish. The pair has pulled back from the 1.7747 high a bit and an extension of the contra move targets the 23.6% fibo of 1.7373-1.7747 at 1.7658 with a break seeing a possible test of the 200 day SMA, this time as support, at 1.7618. Strength past todayâ,"s 1.7747 high exposes the 50% fibo of 1.8503-1.7046 at 1.7775.
USD/CHF â,“ The Swissie really took it to the greenback today, strengthening nearly 200 pips from open to close. Yesterdayâ,"s commentary that â,"Down is looking more and more like the path of least resistance with the recent weakness that has followed the two inside daysâ, proved accurate, albeit quicker than expected. The pair did break below the downward sloping support line (began in early March) but failed to close below it. Former support from the 4/6 low at 1.2804 now serves as immediate resistance with a break above giving scope to the 3/17 low / 38.2% fibo of 1.3057-1.2751 at 1.2868. Continued weakness probes yesterdayâ,"s 1.2750 low, the 76.4% fibo of 1.2552-1.3234 at 1.2714 and eventually the 1/6 low of 1.2672.
USD/CAD â,“ The rejection of the 1.1532 high at the 50 day SMA / 4/13 high yesterday completed a double top and USD/CAD responded with a 100 pip decline. Hourly oscillators are slightly bearish with declining RSI below 50 and a recent negative stochastic crossover, thus favoring additional downside movement. A break of the 4/11 low at 1.1425 targets the 3/2 (and 15 year) low at 1.1297. The amazingly, the next support is derived from the November low in 1991 at 1.1189. The 4/11 high at 1.1496 is primary resistance with a break targeting yesterdayâ,"s high at 1.1532.
AUD/USD â,“ AUD/USD joined the anti-US dollar movement today and closed at its highest level since 3/17. Yesterday was also the biggest gain for the pair since 1/31. So is this the beginning of a move up or one last show of strength before a return to .7000? Hourly charts display negative divergence with oscillators and thus favor a contra move (down). Support sits at the former double top resistance of .7342 with a break exposing the 38.2% fibo of .7013-.7405 at .7255. A continuation of yesterdayâ,"s bullish action contends with the 3/15 high at .7409 and ultimately the 76.4% fibo of .7585-.7014 at .7450.
NZD/USD â,“ Kiwi strengthened yesterday but not to the extent of the other majors. In Tokyo trading, the pair rallied to and failed at the 23.6% fibo of .7197-.5991 at .6275. Further, negative divergence with oscillators on the hourly suggests that the next move is down. Support comes in at the 23.6% fibo of .6060-.6275 at .6224 with additional weakness targeting the 50% fibo / yesterdayâ,"s low at .6167/72. A break above tonightâ,"s Tokyo high of .6275 targets the 3/23 high of .6293.
Sam Shenker is a Technical Currency Analyst for FXCM.
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