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USD/CHF: Pressure on the lows

Tuesday, 21 February 2012 20:10 MIG Bank

EUR/USD

Upside pressure.

  • EUR/USD has been working higher having reversed after failure to sustain the break below minor support at 1.3026 and psychological 1.3000 last week.

  • The pullback from 1.3322 to 1.2974 is seen as a completed correction of the advance from the 1.2624 January swing low, and we look for support at 1.2974/1.3140 (reaction low/weekly gap) to hold for an attack on 1.3322, breach to signal an attack on the 1.3548 reaction high ahead of the 200 day moving average at 1.3745.

     

  • Settlement below 1.2974/1.3140 from here would suggest topping, threatening the old breakpoint at 1.2879 ahead of major swing low at 1.2624 initially in a resumption of the 1.4247 decline.

STRATEGY: Buy limit 3 at 1.3145, Objs: 1.3320/1.3460/1.3545, Stop: 1.2990.

 

GBP/USD

Bull-run resuming.

  • GBP/USD has extended the rebound from 1.5645 following bullish resolution to the hourly trend channel.

  • The pullback from the 1.5929 swing high to 1.5645 is seen as a completed correction of the larger advance from the 1.5235 January swing low.

  • While 1.5645 holds the risk is seen for an attack on 1.5914/29 (200-day moving average/swing high) ahead of psychological 1.6000 then overhead resistance at 1.6096/1.6167 as the next leg higher unfolds.

  • Loss of 1.5645 in the meantime would again risk a test of 1.5500/1.5582 (psychological/50% retrace) before a base can form, while settlement below 1.5500 would suggest that the 1.5235/1.5929 rally was a completed bear market bounce, shifting odds in favour of an attack on the 1.5235 swing low.

STRATEGY: LONG 3 at 1.5775, Objs: 1.5915/1.6125/1.6300, Stop: 1.5775.

 

USD/JPY

Over-extended near psychological 80.00.

  • USD/JPY has seen bullish follow-through on the breach of important resistance at 78.01/78.29 (200-day moving average/old range high), psychological 80.00 now in the sights.

  • While we could see some corrective activity to unwind the recent advance the underlying tone remains positive and we look for the 78.01/78.29 zone to now act as support for further gains on a multi-week/multi-month horizon for 80.55 (rectangle target) then 82.00 ahead of 83.30.

  • Meanwhile, settlement back below 78.01/78.29 would suggest that we have seen a false upside break, although we would need to see USD/JPY settle back below minor support at 77.36 to increase the risk of seeing another crack at the 75.35 post World War II record low.

STRATEGY: LONG 3: 78.90, Obj: 80.10, 81.50, 83.30, Stop: 78.20.

 

USD/CHF

Pressure on the lows.

  • USD/CHF has broken down to see marginal breach of the 0.9089 swing low following last week’s completion of a bull trap.

  • The rebound from 0.9089 to 0.9300 completed the correction of the decline from the 0.9596 January swing high, setting the stage for fresh trend weakness.

  • While 0.9263/0.9300 caps, the risk is seen for sustained loss of 0.9089, a break which should see the bear run extend towards psychological 0.9000 then the 200 day moving average (currently at 0.8767) ahead of a reaction low at 0.8568 further out.

  • Re-capture of 0.9300 would suggest basing, although broken support at 0.9407 would need to be cleared to turn the longer-term outlook positive for the 0.9596 swing high initially.

STRATEGY: Look to sell.

 

USD/CAD

Temporary bounce.

  • USD/CAD is finding some support around the 0.9926 swing low posted on 9th February after the breakdown from 1.0052 which completed a bull trap.

  • Short-term risk is seen to the downside and while 0.9983/1.0052 caps the risk is seen for sustained loss of 0.9928, a move which should then see an extension of the recent downtrend towards reaction lows at 0.9892 then 0.9766 as the bear run resumes following bearish resolution to a triangle.

  • We would need to see re-capture of 1.0052 from here to suggest basing potential, with scope then for a push towards minor resistance at 1.0163 then 1.0250 in a more bullish multi-week scenario

  • EUR/CAD, which tends to share a positive correlation with EUR/USD, is working higher having based ahead of psychological 1.3000. The rate remains within a trading range, with upside resolution to target broken support at 1.3394.

STRATEGY: Shorts favoured.

 

AUD/USD

Testing resistance.

  • AUD/USD is testing hourly resistance at 1.0779 after finding support in the 1.0650 region recently.

  • Settlement above this resistance level would suggest that a minor correction has ended at 1.0629, suggesting scope for an attack on resistance at 1.0890 and then 1.1081 (27th July peak).

  • In the meantime, loss of 1.0629/1.0650 would suggest topping for mean reversion back into 1.0404 (200-day MA), then 1.0146 (09th Jan low) and the parity level.

  • Elsewhere, the Aussie dollar is back on the defensive after a sharp rebound stalled at 1.2932 and remains contained within a multi-week downtrend which still targets 1.2750 and 1.2320.

  • The Aussie dollar has surged higher against the Japanese yen, after breaking above 83.95 (31st Oct high) although the cross continues to look over-extended on a short-term basis.

STRATEGY: SHORT 3: 1.0720, Obj: 1.0400 /1.0230/1.0040, Stop: 1.0830.

 

GBP/JPY

Over-extended but bulls retain control.

  • GBP/JPY has extended gains on the break above the hourly trend channel/200-day moving average to test 126.84 so far.

  • While we could see some corrective activity to unwind the move, support at 123.18/124.16 (old swing high/200-day moving average) should hold for further gains towards the 127.32 key swing high posted in October initially.

  • Further out the structure looks constructive as the rebound from 117.29 appears to be the early stages of a basing process ahead of the 116.84 major swing low posted in September, with breach of 127.32 to confirm a major low calling for 130 plus levels further out.

  • Settlement below 121.69/123.18 would suggest stalling upside momentum, while loss of the 119.60 reaction low would suggest that the rebound from 117.29 is a completed bear market rally, putting pressure back on 117.29 then key support at 116.84.

STRATEGY: Looking to buy lower.

 

EUR/JPY

Over-extended near resistance.

  • EUR/JPY has extended the powerful advance from 101.85 to challenge a downtrend line coming in from the July 2011 high.

  • While we could see some corrective activity to unwind recent gains, the structure looks positive and the pullback should be contained by support at 101.85/102.21 (minor support/old swing high) prior to seeing an attack on the 200 day moving average (currently at 107.26) initially.

  • Settlement below 101.85/102.21 would warn of stalling upside momentum exposing 99.25, loss of which would suggest that the entire advance from 97.04 was a completed bear market bounce, setting the stage for a return to 97.04 initially as medium-term bears gain control.

STRATEGY: Looking to buy.

 

EUR/GBP

Higher within the range.

  • EUR/GBP is working higher having found support ahead of 0.8265/0.8300 after breakdown from key resistance at 0.8410.

  • The cross remains mired in a 0.8265/0.8410 trading band which needs to be resolved before a solid directional bias can be determined.

  • Sustained loss of support would signal a resumption of the major downtrend calling for an attack on strong support coming in around 0.8142 (August 2010 low).

  • Bullish resolution to the range would complete a base pattern calling for a return to broken support at 0.8485 then the 0.8619 reaction high and the 200 day moving average, currently at 0.8634.

STRATEGY: Stand aside.

 

EUR/CHF

Bearish below 1.2129.

  • Early signs of basing have been noted ahead of the 1.2032 recent swing low.

  • The bearish resolution to a 1.2131/1.2474 trading range in January effectively turned the trend down, and while below 1.2129 the likelihood is seen for a test of the 1.2032 swing low then key 1.2000 before a base can be attempted.

  • Sustained loss of 1.2000/1.2032 could see an acceleration of the major downtrend towards 1.1500 initially, while re-capture of 1.2129 then broken support at 1.2226 would suggest that a solid base has formed, turning the focus to the 1.2474 swing high initially.

STRATEGY: Short 3 at 1.2130, Objs: 1.2010/1.1526/1.1002, Stop: 1.2135.

 

GOLD

Strong support ahead of $1700.

  • Gold has breached hourly resistance at $1737/$1738 as bulls attempt to regain control after the pullback from the $1763.15 swing high based ahead of the psychological $1700 level.

  • Settlement above $1737/$1738 would suggest that a base has formed re-opening the swing high ahead of the November reaction high at $1803 as the larger advance from the major swing low at $1522 extends.

  • In the meantime, settlement below $1700/$1705 would risk a sharp decline back towards the rising 200-day average (currently around $1664) before a solid base can form, while loss of the 200-day would risk breakdown towards $1600 initially.

STRATEGY: SHORT 3: 1730, Obj: 1650/1560/1460, Stop: 1765.

 

SILVER

Early signs of basing.

  • Silver has breached an hourly resistance line at 33.6900 as early signs of basing emerge after the pullback from the 8th February swing high.

  • Sustained breach of 33.6900 would put pressure on the 34.5350 swing high and the 200 day moving average at 34.8661 as the advance from 26.1600 extends, with resistance at 35.6875 (Oct peak) then possible before a top can be attempted.

  • Support at 31.5450 and 30.0000 (psychological) act as our downside trigger levels that would help unlock a resumption of the larger bear cycle into 28.9500 and 26.1600 (29th Dec-hammer pattern low).

STRATEGY: SHORT 3: 33.1750, Obj: 31.7230/29.3410/26.0700, Stop: 35.0710.

 

MIG Bank
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