Today's Focus: EURUSD &USDJPY
- EURUSD: Further Downside Momentum Highlights The 1.2330 Level.
- USDJPY: Recapture Of The 94.62 Level Builds Up.
As a follow-through on its current downside momentum tested below its key support (the 1.2551 level, marking its Dec 04'08 low) intra day at 1.2514 Wednesday before backing off to close at 1.2566,decisively invalidating the 1.2551 level will highlight its Oct'08 swing low at 1.2330.With the present decline in tune with its overall medium term weakness and supported by its daily and weekly momentum indicators, EUR is likely to break and even surpass the 1.2330 level with downside risk seen towards the 1.1860 level, its Mar'06 low and then its Nov'05 at 1.1640.However,if a correction of the mentioned declines were to occur, we expect the 1.2766 level, its Jan 23'09 low and the 1.2706 level, its Feb 02'09 low to reverse roles and provide resistance thereby turning the pair lower again. Further out, the 1.3000/1.2993 level, its psycho level/Feb 06'09 high should come in as the next upside with a turn above there clearing the way for a run at its Feb 04'09/Nov 25'08 high at 1.3071/81 and then its Jan 27/28'09 highs at 1.3327/30.Our view is for the pair to print a negative weekly close and for the 1.2706/66 zone to turn off any corrective upside offensives if seen. These two price action activities will give us more confidence of a retest of the 1.2330 level or even a break beyond there. On the whole, EUR continues to retain its bearish medium term momentum but now requires a clearance of the 1.2330 level to trigger that trend.
|1.2551||Dec 04'08 low|
|1.2706/66||Feb 02'09 low /Jan 23'09 low|
|1.3000/1.2993||psycho level/Feb 06'09 high.|
|1.3071/81||Feb 04'09/Nov 25'08|
Having decisively cleared and held above its key resistance at the 92.41 level, its Feb 09'09 high on Wednesday, focus has now turned to the 94.62 level, its Jan'09 high. This level is very significant as its break will confirm a double bottom chart pattern printed in Dec'08 and Jan'09 and create an upside price objective of 102.22.But the pair will have to overcome the 97.43 level, its Nov 24'08 high and the 100.55 level, its Nov 04'08 high before meeting that target if the 94.62 is convincingly taken out. The pair is supported by its daily and weekly studies though the former is now in overbought zone. On the downside, its invalidated resistance at the 92.42 level is now expected to reverse roles and provide support and push USDJPY higher again. Other supports below here are seen at the 91.30 level, its Jan 19'09 high and the 89.71 level, its Feb 11'08 low followed by the 88.59 level, its Feb 03'08 low and its double bottom/ YTD low at 87.13.While we believe the pair's current upside is corrective based on its broader medium term decline, breaking and holding above the 94.62 level will create a chart damage and put the mentioned MT trend on hold. On the whole, with the 92.42 level out of the way,USDJPY is now expected to head further higher with the 94.62 level seen as the next target.
|91.30||Jan 19'09 high|
|89.71||Feb 11'08 low|
|97.43||Nov 24'08 high|
|100.55||Nov 04'08 high|
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