After all the rumors of 30 banks failing the latest stress test in Europe, at the end only 9 banks were in hot water as others already started raising capital early in the year. Note the latest test were a also a little bit more stringent uncluding a 25% write down scenario though still discounting the possibility of a full defaukt by Greece. Ahead with Japanese markets closed and little in the way of market moving events we expect technical imperative to drive the market, though we are likely to keep a risk averse bias.
Friday saw a very tight range in USDJPY with only 29 pips for the whole trading day ahead of today’s Marine day holiday. From indicators we have prices still well below their daily EMA lines, while stochastic is heading up and macd is dropping. Intraday charts are giving mixed signals as the 4H picture see a bullish macd and bearish stochastic. Hourly indicators for their part show a confluence of bears. Given proximity to historical lows we prefer taking the long side of the market a buy on dips to 78.50 or on a break of the 79.26 region.
We are unable to hold on to gains following the strong quarterly CPI read at 1.0% against an 0.8% consensus forecast. Daily indicators see stochastic in overbought areas while macd’s are technically bullish though flat. In 4H charts we have a double top pattern with a breakout point at 0.8387, indicators show a confluence of bears developing. Hourly charts see macd’s with a new bear cross while stochastic is going oversold. Look for a close under the 0.8387 region to trigger the double top, pattern target at 0.8266.
Cable saw a downside gap at the open though prices remain stuck inside the daily EMA lines. From indicators we have daily stochastic coming off overbought levels while macd’s are heading higher. Intraday we are seeing mixed signals as the 4H picture see EMA lines acting as a support keeping a confluence of bears in macd and stochastic at bay. Hourly indicators are seeing mixed signals with macd heading lower and stochastic heads down. Note the big picture SHS from weekly charts remain valid. Look for a close under 1.6075 on an hourly before taking the short side of the market. Alternative entry will be a short from just under 1.6133.
After seeing a high wave spinning top at the close Friday we have Euro starting poorly with stochastic seeing a new bear cross while macd heads lower. Among the lower time frames we also see a confluence of bears in the works, as hourly stochastic push for oversold levels along with the 4H charts. Macd’s lines are also seeing new bear crosses. Given the holiday’s in Japan we prefer a cautious approach in entering the market, consider sells from under 1.4091 possibly 1.4112 with tight stops at 1.4120 for 1.4036 possibly 1.3982.
We are seeing a poor start for the week in Aussy following Friday’s dip back under the daily EMA lines. Indicators show a confluence of bears with stochastic and macd seeing bear crosses. In intraday charts we have a confluence of bears from all-over with the 4H and hourly stochastic poised to reenter oversold levels while macd’s also see new bear crosses. For now look for shorts from just under 1.0622 for 1.0578, then previous weeks lows at 1.0525.
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