Wednesday was a roller coaster ride for the currency market keeping track of developments in European and US equity indices. After starting out in negative territory European equity indices quickly pushed backed into the plus column sold off again and finally closed mixed. The US for its part saw a negative open, struggled to push above the water line just passed midday only to see a late sell-off as Fitch warned of the exposure for the banking system to the European debt crisis. From the charts we continue to see a stronger dollar though just as in equities currencies saw a roller coaster ride down. Cable has finally seen its multiple top breakout objective the next day after the move while Euro and Aussy saw new lows in keeping with their lower highs lower lows whipsaw action. Thus far we are seeing little follow through action from Asia to the US sell-off suggesting people may be weary from all the twists and turns yesterday. It should be worth noting that we have already seen our objective in our Cable’s multiple top the 1.5681 price point while Euro and Aussy as well has accomplished their lower lows which could keep us stuck for while until we get the next round of catalyst.
After Tuesday break of the 1.5872 region we now find Cable just above the key price objective of 1.5682, the next strong support from the daily charts. Among indicators daily stochastic is oversold while macd is opening lower the rapidly widening gap with its signal line suggesting stochastic is right. In 4H charts we have macd’s dropping and stochastic reentering oversold levels. Hourly indicators see a similar confluence of sells signals from macd and stochastic. At the moment given the importance of our immediate support we would like to see a close under 1.5682 before looking for further downside. Otherwise we may find ourselves with base building above a key level.
EURUSD managed to finally see a lower low Wednesday with daily indicators continuing to suggest bear market as stochastic push to oversold levels and macd continues to drop. Intraday we continue to see a bearish environment, from the 4H picture we have just crossed lower in stochastic with macd continuing to drop. Hourly indicators for their part has stochastic oversold and macd crossing lower. From current levels we still have room to maneuver in EURUSD with the strong support still at 1.3381. However given the usual reticence of of the Asian market we prefer shorting from a pullback to the 1.3456 region with tight stops above the number for a test of the 1.3381 price point.
Aussy has finally seen a lower low in the daily picture in keeping with the lower highs and lower lows that we’ve been seeing in our whipsaws. Among indicators we have macd’s continuing to drop while daily stochastic has also pushed to oversold levels. Note we have a widening gap between prices and the EMA lines though so far no hints of mean reversion. As with the rest of the dollar pairs intraday we are also seeing a confluence of bears between 4H and hourly macd and stochastic, the latter for hourly charts already oversold. For now we are looking forward for a push back under parity, consider sells from just below 1.0051, better from just under 1.0115.
We have seen Kiwi selling off since the start of the week quickly covering an upside gap in its open Monday from the Wellington market. Wednesday turned out to be little different simply confirming Tuesday’s push under 0.7732 a strong point in our charts. Among indicators we have daily stochastic oversold and macd still dropping while prices have wandered far from the EMA lines opening risk of mean reversion. In the lower time frames we have 4H and hourly macd dropping while stochastic in the latter has pushed to oversold levels. For now we appear to continue seeing a bearish bias though price action has been muted so far. Consider shorts on any bounce to the 0.7732 region.
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