EUR/USD â,“ For the third day in a row, EUR/USD pierced the 50% fibo of 1.3666-1.1640 at 1.2650 and subsequently closed below that fib level. The fact that shorter term moving averages crossed above longer ones, the breaking of long term trendlines, and the new 2006 highs all point to higher prices in the longer term, but the inability of EUR/USD to trade past the 1.2650 fib level points to further correction/consolidation in the short term. Hourly oscillators are bearish as well with MACD crossing below 0 and RSI declining below 50. The highs from yesterday and Monday remain resistance at 1.2669/88. Support rests at the 23.6% fibo of 1.2068-1.2688 at 1.2542 with a break below targeting the 38.2% fibo at 1.2450. The uptrend remains intact as long as the 4/6 high of 1.2331 holds.
USD/JPY â,“ USD/JPY continues to correct and currently sits at the 23.6% fibo of 118.88-112.34 at 113.87. Daily oscillators are turning up including RSI, which is now above 30. There is not much congestion past the 4/24 low at 114.23, and thus a continued corrective move possibly tests the 38.2% fibo of 118.87-112.34 at 114.82. Yesterdayâ,"s 112.88 low is initial support with a break below giving scope to Mondayâ,"s low at 112.33. The downtrend remains intact given that the 3/1 low at 115.44 holds as resistance.
GBP/USD â,“ Cableâ,"s strength looks to have been interrupted, at least temporarily by the 61.8% fibo of 1.9323-1.7040 high at 1.8450. A last ditch effort to test the 9/5/05 high at 1.8501 is still a possibility but looks less likely now given the shift in momentum on the hourly and dealer charts. Contra moves could challenge support defined by an intraday reaction high from Monday at 1.8293 with a break below targeting the 5/1 low at 1.8201. Resistance remains at the 5/3 high of 1.8475 as well as the 9/5/05 high at 1.8501. The bias remains bullish unless sellers take the pair lower than the 1/25 / 4/19 highs of 1.7934 on a daily close.
USD/CHF â,“ After testing the 1.2300 figure again yesterday, USD/CHF has formed a double bottom on intraday charts and has rallied to 1.2400. RSI slopes up on the daily as does MACD-Histogram, further suggesting a corrective move. Still, after consolidating for much of the first quarter, the break to the downside led to 2006 lows at 1.2285. A yearly low after a prolonged period of consolidation is a strong technical indication that the path of least resistance is down.
USD/CAD â,“ â,"The 161.8% fibo of the 1.1297-1.1771 March bull wave comes in at 1.1005 and is the next estimate for support â,"is what we concluded yesterday. The pair came awfully close, making its low yesterday at 1.1011 before buyers finally took over after 8 consecutive days of losses. Yesterdayâ,"s daily candle is also a hammer; a bullish reversal pattern. The consolidation of the extreme losses could test the 23.6% fibo of 1.1771-1.1011 at 1.1188 with a break exposing the confluence of the 38.2% fibo / 3/2 low at 1.1297/1.1300 â,“ a level which if held keeps the recent downtrend from 1.1771 intact. A continuation of the downtrend first encounters the mentioned 1.1011 low and eventually the 20% fibo of 1.1297-1.1771 at 1.0825.
AUD/USD â,“ The Australian dollar has retreated from yesterdayâ,"s highs and trades back below .7700 this morning. Hourly RSI (21 period) is below 50 for the first time since Tuesday at .7591, suggesting that weakness is a possibility. Support stems from the 5/2 high at .7634 and the 1/31 / 2/1 highs at .7585. Resistance is defined by yesterdayâ,"s high at .7717 with a break exposing the 9/12/05 high at .7762.
NZD/USD â,“ Kiwi did challenge and pass Mondayâ,"s high yesterday of .6425, but since retreated to below .6400. We mentioned yesterday that â,"the dealer chart shows negative divergence with RSI and as such gives scope to a move down, possible to the 4/24 high at .6371â,. The low in Tokyo trading this evening has been .6361, which remains initial support going forward. Hourly oscillators are bearish with MACD declining below 0. Additional weakness targets the confluence of the 23.6% fibo of .5991-.6443 / 5/2 low at .6335/37.
Jamie Saettele is a Technical Currency Analyst for FXCM.
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