•Euro well supported ahead of 200-Day SMA
•Dollar/Yen bounces by Ichimoku cloud bottom; bullish outside day
•Cable still locked in rare up and down trading sequence
•Dollar/Swiss rally stalls out; eyes retest of recent trend lows

2009-05-18_classical_1

EUR/USD

EUR/USD - Setbacks on Monday towards the 200-Day SMA have been very well supported with the market bouncing from daily lows by 1.3420 back to and above daily opening levels by 1.3495. Overall in the short-term, we continue to see dips limited, with the risk for a fresh push higher to challenge and break above the key trend highs at 1.3740. Once 1.3740 is broken, we will then look to establish USD long positions in anticipation of a more medium-term USD rally. Strategy: SIDELINED; AWAIT CLEARER SIGNAL.

Level

Resistance

Details

1.3740

R3

3/19 high

1.3665

R2

5/14 high

1.3555

R1

5/11 low

Level

Support

Details

1.3420

S1

5/18 low

1.3340

S2

5/8 low

1.3250

S3

5/7 low

USD/JPY

USD/JPY - The bottom of the Ichimoku cloud has proved to be a formidable support for now and the pair has reversed course sharply to put in a bullish outside day on Monday. Look for an interim low by 94.55 and fresh upside over the coming days back towards the 96.70-97.85 zone. Only back under 94.55 negates and exposes deeper setbacks. Strategy: SIDELINED; AWAIT CLEARER SIGNAL.

Level

Resistance

Details

97.85

R3

5/12 high

97.25

R2

5/11 low

96.70

R1

5/13 high

Level

Support

Details

94.55

S1

5/18 low

94.15

S2

3/20 low

93.55

S3

3/19 low

GBP/USD

GBP/USD - Market price action remains extremely choppy with the pair failing to show any follow through from previous daily momentum. Since May 6, it has been up-down-up-down-up-down-up-down-up. We retain a mildly bullish bias and given the proximity to the 2009 highs from early January, we see no reason why this level won't be tested over the coming hours. Only a break back below 1.5060 will however delay the recovery structure. Strategy: SIDELINED; AWAIT CLEARER SIGNAL.

Level

Resistance

Details

1.5500

R3

Psychological

1.5375

R2

1/8 2009 High

1.5350

R1

5/1 high

Level

Support

Details

1.5115

S1

5/18 low

1.5060

S2

5/14 low

1.4980

S3

5/5 low

USD/CHF

USD/CHF - Some very interesting price action in the pair with all relevant moving averages coiling, a sign that we could be nearing a major breakout. Our bias is for a major upside break but we can not rule out the possibility for additional setbacks towards the 1.0865 area before the rally occurs. Any dips to 1.0865 over the coming sessions will be used as a buy opportunity. Price action has been extremely constructive on Friday but the market will need to break back above 1.1450 to officially take the pressure off of the downside. Strategy: SIDELINED; AWAIT CLEARER SIGNAL.

Level

Resistance

Details

1.1425

R3

5/7 high

1.1340

R2

5/8 high

1.1270

R1

5/18 high

Level

Support

Details

1.1125

S1

5/14 high

1.1025

S2

5/14 low

1.0975

S3

5/13 low

Written by Joel Kruger, Technical Currency Strategist for DailyFX.com. If you wish to receive Joel's reports in a more timely fashion, e-mail jskruger@fxcm.com and you will be added to the distribution list.

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