Euro Price Action Taking Form of Bearish Descending Triangle. Dollar/Yen Set for Doji Close. British Pound Still Holding Above 1.4055. Dollar/Swiss Trade Remains Choppy. Dollar/Cad SMA Convergence Warns of Breakout. Australian Dollar Attempting to Put in Higher Low. New Zealand Dollar Well Supported on Dips.
Inability for the pair to close above 1.2940 last week seriously dampens any hopes for a legitimate recovery. The market has been trading with a heavy tone into the early week and a closer look at the daily chart shows the formation of a bearish descending triangle formation with the market gradually making a series of lower highs while at the same time finding support right by the 1.2700 figure. This would imply that we are nearing a break below 1.2705 (2Feb low) for a bearish resumption potentially exposing the key trend lows at 1.2330. (We ignore price action on holidays). Strategy: SIDELINED; AWAIT CLEARER SIGNAL.
Price action in the major is starting to look more constructive after the latest round of setbacks off of the early January 2009 highs stalled out perfectly by 87.15, to match the previous trend lows from December. With weekly stochastics just having crossed up from oversold, there is plenty of room for gains to run over the coming weeks. The market had been trading below the daily Ichimoku cloud since mid-September but the current push higher is threatening this trend. The top of the cloud currently resides at 93.85 and a move back above will undoubtedly attract fresh bids. Another potential bullish formation that could be taking hold on the weekly chart is a textbook double bottom with neckline resistance by 94.60. A break back above the neckline at 94.60 would be significant as this pattern trigger would project additional upside back above 100.00 and towards the 104.00 area (measured move objective).(We ignore price action on holidays). Position: LONG@ 90.80 FOR A 92.45 OBJECTIVE, REVISED STOP @91.25.
The latest round of setbacks off of 1.4990 (9Feb high) have stalled out just ahead of the early February 1.4055 higher platform and have been unable to establish back below the 50% fib retracement off of the 1.3500-1.4990 move. While the overall structure remains grossly bearish, the market could still be attempting to build a medium-term base at 1.3500 with Friday's bullish reversal potentially warning of a higher low above 1.3500 at 1.4135 (12Feb low). Look for a break back above Friday's 1.4605 spike high to confirm and open a direct retest on 1.4990. Back under 1.4135 however, will likely expose the 1.3500 trend lows. (We ignore price action on holidays). Strategy: SIDELINED; AWAIT CLEARER SIGNAL.
Gains failed to materially extend last Tuesday after yet another attempt to establish above 1.1700. The upside push stalled out at 1.1785 before reversing sharply to trade back down to the 1.1500 recent range base area. It looks like we could still be locked in sideways trade for a little while longer before ultimately breaking higher to challenge the 1.2300 trend highs. Key levels to watch above and below over the coming sessions come in by 1.1715 and 1.1560 respectively. A convergence of the 10/20/50/100-Day SMAs does however suggest that we are indeed nearing a breakout. (We ignore price action on holidays). Strategy: SIDELINED; AWAIT CLEARER SIGNAL.
The market remains confined to a choppy range trade with the price most recently failing by loose falling trend-line resistance at 1.2765 (21Jan high). Look to continue to play the triangle high-lows until a meaningful break has been achieved. The overall structure is bullish and as such establishing a long position on a dip to triangle support should prove to be rewarding. A closer look at shorter-term moving averages shows the 10/20/50/100-Day SMAs all converging to warn of the impending breakout. (We ignore price action on holidays). Strategy: SIDELINED; AWAIT CLEARER SIGNAL.
The latest round of setbacks from 0.6850 (Monday high) have been well supported over the past few days above 0.6430 (13Feb low). Friday's break back above Thursday's 0.6620 high should be encouraging for bulls and could now signal a fresh higher low by 0.6430 ahead of the next upside extension through 0.6850. Look for a break back above 0.6645 in the early week to accelerate. A bullish cross of the 50-Day SMA with the 100-Day SMA strengthens case. Back under 0.6430 however will negate and keep downtrend firmly intact. (We ignore price action on holidays). Strategy: SIDELINED; AWAIT CLEARER SIGNAL.
Setbacks off of the recent 0.5450 highs have now been well supported in the mid-0.5100's which coincides with previous support from back in late January. The market could be attempting to carve out a higher low above 0.4960 (2Feb Trend Lows) which would ultimately be confirmed on a break back above 0.5450. However, a break above 0.5320 (12Feb high) will initially strengthen short-term bullish outlook. Back under 0.5140 will negate and expose 0.4960. (We ignore price action on holidays). Strategy: SIDELINED; AWAIT CLEARER SIGNAL.
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