It appears that Friday has been a day of suprises with us making a 1-1, through much of the days session we were speculating on an upside surpsise for the US NFP which rightly so turned out at 103,000 against the 55,000 consensus forecast. The subsebquent Fitch decision to downgrade Spian and Italy however caught us by surprise, with markets overall forced to take a 180-degree turn the Euro losing the most as it closed with a bearish inverted hammer. At the moment we are seeing Asian markets responding positive to the US jobs numbers though as we’ve speculated then it would take average reads of 200K and two years for the US jobs market to be back where it was before the crisis. We expect however that the positive start in Asia will not be sustainable once Europe opens as European traders have to respond to the downgrade which caught most already out of their offices.
Despite a pullback after the European close and credit downgrades we still managed to see a big white body in the daily GBPUSD charts keeping open the possibility of a daily double bottom. Looking at indicators we have daily stochastic poised to push to overbought levels while macd is also rising, we are currently just under the 21D EMA at 1.5606. From the 4H level we have a dark cloud cover among the candles following Europe’s close while macd is rising and stochastic heading lower. Hourly indicators for their part has macd poised at a bullish cross while stochastic is just under the 80-level. Immediate risk appears to be a push for the double bottom trigger though we do not expect a daily level turn-around. Look for a close above 1.5627 to trigger a rally.
With the sudden risk aversion following the Fitch downgrades we had Kiwi closing the week with a grave stone doji. Note most of our resistances are moderate based on price action and we also have daily EMA providing another layer of resistances likely keeping the top side limited. Among indicators we have mixed signals with daily stochastic crossing lower at the moment while macd is opening up. In intraday charts we have 4H stochastic with a new bullish cross for a bullish bias while hourly macd has just crossed higher with stochastic already rising. Immediate risk points to a test of our moderate resistances though given daily EMA’s providing another layer of rejection we prefer taking the sell side from under 0.7833, at-least 0.7781.
As with most of the dollar pairs we saw a turn-around in USDCAD following the Fitch credit downgrades with Friday’s close a possible hammer our daily candle seeing a long tail from the 21D EMA. Among indicators we currently have a mixed view stochastic with anew bullish cross while macd also has a new bear cross. We are currently between strong price levels, our 21D EMA at 1.0271(78) and the breakout point at 1.0370. In 4H picture we have a bear cross coming out of stochastic to join a bearish macd, while hourly indicators see a confluence as macd crosses lower and stochastic push to oversold levels. For now we suggest remaining sidelined though range plays may be initiated with shorts from just under 1.0370.
Following the Fitch ratings downgrade for Spain and Italy we saw EURUSD selling off from its 21D EMA’s to close with a bearish inverted hammer. Daily indicators now show a bear cross out of stochastic though macd is still pointing up. Despite the sell-off intraday indicators are looking bullish. In 4H charts we have stochastic with a new bullish cross coming off oversold levels as while macd continue to point up. Hourly indicators for their part has stochastic in overbought areas while macd is close to crossing higher. For now we have prices just under a minor resistance at 1.3450, immediate risk is for a push higher. We prefer taking the sell-side from under the 1.3514(23) region, the 21D EMA.
Completing a week of gains AUDUSD managed to push to the 21D EMA only to get rejected for an inverted hammer at the end of the day following broad-based risk aversion as Italy and Spain saw their credit ratings downgraded. At the moment we have daily stochastic poised to come off overbought levels while macd is rising. From the lower time frames we see a confluence of buys in 4H charts while hourly indicators show macd bottoming out and stochastic rising. Immediate risk appears to be for a push to the resistances with Asian traders responding to the demand story out of US NFP’s. Given earlier releases and the Friday rejection we prefer looking for shorts from under 0.9867 for 0.9691 38.2 Fib of the previous weeks rally, initial objective the 0.9744 region.
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