After a poor start US markets managed to find itself closing in the plus column though gains for the most part were marginal while in Europe only the FTSE 100 stood out with 2.70% gains playing cath-up with the strong performance monday. For currencies the lack of decisiveness appears to have lead to a pullback day with EURUSD finally getting rejected from its 2-month congestion resistances for the start of possibly a new down leg while GBPUSD also retreated as Cable appears to have been sold across the board. At this point we will be looking at a preview for NFP later one with US ADP NonFarm Employment Change numbers out at 1215GMT the consensus calling for a 102K read though anecdotal evidence suggests we may likely fall short of the consensus.
We continue to see tight ranging action in USDJPY though prices are once again approaching the strong support at 76.46. Indicators show daily EMA dropping, stochastic is still heading lower while macd is pointing up. In intraday charts we have a confluence of bears from the 4H picture, while hourly indicators are also seeing sell signals. Given that we have September and the end of the first half of the Japanese fiscal year rolling in we face greater prospects of intervention for the Yen allowing for better pricing as corporate Japan repatriates overseas profits. For now we prefer looking for buys from just above 76.46, though the lower the better and wait for the eventual verbal intervention spike quite likely the real deal given the new intervention budget.
Tuesday ended up a high wave spinning top to suggest our uptrend for the last three weeks may be at risk of seeing a substantial pullback. Indicators remain bullish with daily stochastic in overbought territory while macd is rising. Note we are still well below the next strong resistance at 1.0790. In 4H charts we are seeing a bearish divergence from stochastic with macd also topping off. hourly indicators has macd dropping while stochastic is also technically bearish. Immediate risk appears to be for a pullback with 1.0600 our strong support as a natural target. We prefer a buy on dips to the 1.0600 area.
After seeing a confirmed bullish engulfing pattern monday, we saw Cable easing off yesterday with GBPUSD back inside the daily EMA lines with stochastic still pointing up while macd is heading lower. From the lower time frames we have more mixed signals with stochastic coming off oversold levels and macd dropping. Hourly indicators see a confluence of buys. We appear to have indecisive GBPUSD charts for the moment though we would like to note that selling interest has been cropping for Cable during the European session. For now we prefer remaining sidelined though Cable may be a sell on rallies during the European session, look for shorts from under 1.6362.
We have finally seen a rejection from the 8-week long range play in EURUSD daily charts with yesterday’s candle turning into a bearish engulfing. We are now looking for a confirmation of the bearish reversal, indicators has daily stochastic coming off overbought levels while macd is topping off. Intraday we are looking at mixed signals with 4H stochastic up and macd’s down. Hourly indicators has macd flat though technically bullish, stochastic are just above the 20 mark. Given the mixed signals we prefer remaining sidelined though a close under 1.4412 may pave the way for new sell signals and trigger a sell-off to the key support at 0.7328, last weeks congestion floor.
Kiwi saw a pullback towards the close for a long wick though we still managed to close above the 61.8 Fib at 0.8507 with the body of our daily candle remaining substantial. Daily indicators remain in overbought levels while macd is opening up even as EMA’s are beginning to see golden crosses. From the 4H picture we have stochastic with a bearish divergence while macd is topping off. Hourly indicators see a confluence of bears. Given the bearish divergence in 4H charts and a double top in hourly candles immediate risk appears to be for a pullback. We are currently working around the 0.8507 region a close under this on an hourly basis would trigger our double top with pattern target at 0.8457 the next support at 0.8434. Note we have Business Confidence figures at 0100GMT a poor read may trigger our pattern.
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