Thursday eventually saw the Euro at the top of the currency markets as a tentative breakout from the open of European markets managed to gain traction in New York trade. What is interesting here is that commodity currencies were little seen in this rally suggesting that we are driven by the liquidity that European markets currently see following the ECB’s LTRO last December. Note we have had a succession of highly successful bond auctions from Europe despite ratings dowgrades and warnings of more to come. A quickly of the daily charts show us double bottoms triggered in EURUSD, EURJPY, and EURCAD with a rounding bottom in EURAUD. Given the rally in Cable as well, EURGBP itself is still at the brink of its own double bottom breakout. We now think Euro pairs may be seeing a correction for their sell-off since last November, late October. For now are looking for 38.2 Fib retracements in these charts. Going forward we are minutes away from HSBC’s Flash PMI data for China, a read above 50 could be the catalyst for commodity currencies to push up while a new cycle low, sub 48 read would suggest a sell-off for commodity currencies.

NZDUSD

Res: 0.8038/0.8064/0.8081

Sup: 0.8000/0.7983/0.7961

Thursday turned out to be a tightly ranging market for Kiwi with the sell-off following poor CPI numbers seeing little follow through. We are currently just under the 200D SMA with indicators showing mixed signals a bearish divergence cross lower in stochastic while macd is heading higher. In 4H charts we are seeing mixed signals with stochastic coming off oversold levels while macd is dropping. Hourly indicators has a confluence of buys, for the moment. At this point we are seeing a tight range ahead of the flash PMI figures for China, a read above 50 should lead to a break of our resistance while a new cycle low below 48 will have us pulling back to the 0.7983 breakout point.

USDCAD

Res: 1.0137/1.0167/1.0187(89)

Sup: 1.0108/1.0071(84)/1.0052

At the end of the day we had USDCAD with a dragon fly doji as the sell-off in early European trade reversed towards the open of US markets. Daily indicators has macd’s still pointing lower while stochastic is coming out of oversold levels and we appear at risk of mean reversion with the EMA lines. In 4H charts we have a confluence of buys with macd seeing a new bullish cross while stochastic is overbought. Hourly indicators has stochastic reentering overbought levels while macd is rising, the combination suggesting an uptrend. Immediate risk calls for further gains in USDCAD a push to the 21D EMA at 1.0187(89). Note it would be better to wait for HSBC’s Manufacturing PMI numbers at 0230GMT.

AUDUSD

Res: 1.0436/1.0450/1.0500(04)

Sup: 1.0393/1.0370/1.0353

Thursday turned out to be a mixed market for commodity currencies with Aussy in particular stuck in modest range to close with a high wave daily candle. From indicators we have stochastic in overbought levels while macd is rising as we follow through our break of the 200D SMA and bounce off the EMA lines from earlier in the week. Intraday we are seeing mixed signals form the hourly and 4H levels. Hourly charts has macd flat and stochastic dropping while 4H indicators has macd flat below the signal and stochastic heading up. We are waiting for the release of Chinese data with a strong PMI number, i.e. above 50 likely to see an upside breakout and a move for 1.0500. A read below 48.0 previous cycle low would suggest pullback to 1.0336.

EURGBP

Res: 0.8376/0.8421/0.8447

Sup: 0.8349/0.8326/0.8304

With EURUSD and other crosses triggering bullish reversals in the daily charts we have EURGBP now poised at its own double bottom break out, the trigger 0.8376 a strong resistance area. Prices for now are in between the 34D and 55D EMA with daily stochastic pushing to overbought levels and macd on the rise. From the lower time frames we have mixed signals, 4H indicators show a confluence of buys with macd rising and stochastic pushing for overbought levels. Hourly charts for their part has stochastic coming off over bought levels while macd is flat. Given the proximity to our strong resistance it would be best to wait for at least an hourly close above 0.8376 before going long. Immediate risk actually calls for a pullback, so alternative entry could be coming from the 0.8349 region.

GBPUSD

Res: 1.5496/1.5524/1.5554

Sup: 1.5460/1.5433/1.5404

As with the Euro Cable also benefited from liquidity in Europe though gains were capped ass the EURGBP crosses pushed to key resistances. At this point we find GBPUSD inside the daily EMA lines, our likely objective to push for the 55D EMA. Note we have daily stochastic overbought and macd crossing higher. In the lower time frames we are seeing mixed signals with 4H indicators suggesting we are in an uptrend as stochastic reenter overbought levels while macd is on the rise. Hourly indicators for their part are seeing sell signals. For now immediate risk appears to be for a pullback to the 1.5460 minor support level though this could turn-out to be our entry point for the move to the 55D EMA, 1.5554.

EURUSD

Res: 1.3000/1.3074/1.3120

Sup: 1.2925/1.2878/1.2838

After a tentative break of the 1.2878 region, EURUSD eventually managed to rally in the New York trade following failed attempts to move back under the breakout point. We now have a confirmed daily double bottom breakout with pattern target at 1.3133 with daily indicators showing an overbought stochastic while macd is also on the rise. In the lower time frames we are seeing a confluence of buys with stochastic in both hourly and 4H charts overbought while macd is bullish. Given the indicators and the big picture breakout we prefer taking the buy side of the market though entries should be coming off the support rather than jumping on new highs with 1.3074 remaining as the objective.

 

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