We are going to start this post off with a few statistics;
1) GBPUSD during the London session moved a total of 550 pips from top to bottom.Â After the London close had a range of 153 pips
2) EURUSD fared a little better, posting 160 pip gains during London session and since then has produced a similar range
3) GBPJPY moved 600 pips from peak to trough during London trading but since then has only posted a 280 pip range.
Bottom line is almost all the money is moving out of the currencies leading into the historic US election tomorrow.Â With that being said, we recommend keeping positions small for the upcoming EURO session and recommend phasing out of most positions come the light over the eastern skies of the NY horizons.
All is not lost as there is some intersting technical setups to be noticed.
We like the the charts on the following pairs:1) AUDUSD - this pair has spent the last 3 days chopping at the mildly declining 20EMA on the daily charts.Â Unlike the EURUSD and GBPUSD, Momentum has been bouncing decently off the bottom with good divergence over the last month.Â Althought the momentum is choppy (suggesting the market is not totally convinced of the bounce off the lows) the bottom line is the momentum lifting nicely off the bottom while the pair has made lower highs and lows, combined with the triple knock on the 20EMA’s door suggest a daily close above will likely give AUD bulls more hope and bring in some fresh order flow for the short term upside.
Currently the 20EMA is clocking in at about .6827 at the time of this writing (7.15pm PST) and the highs for last week post up at .6896.Â Thus, a decent break above the .69 handle suggests a likley move up towards the big figure at .7000 (barring no significant pivot rejections).Â Downside moves should assault the .6500 handle and then give a relatively smooth fall towards the yearly low at 60 cents.Â With the current 20EMA being almost flat at about a 15 degree down angle, selling is mild and cautious so it should not take too much convincing for the short term bulls to make a statement and crack the 20EMA.
Lastly, Ichimoku models on the daily charts show the Tenkan line has become support now that price action has broken above it and spent the last 4 days there - something it has not done since late September.Â The next line of defense according to Ichimoku models is the Kijun line giving us a .7050 reading which ironically is the three week high.
2) GBPUSD - this pair has suffered the worst and offered the smallest push back against the USD.Â Looking at the daily chart below, the pair has only managed a brief sojourn above the Tenkan line (white line) which is a 9EMA.Â After failing to close above the 1.55 handle on three attempts, the pair tried something different which was its first 3 day climb since late September.Â This climb however was different wherein it was 300 pips larger, but achieved with far less momentum.Â The momentum models really paint the picture with it creating new lows today and offering no promising attacks to the upside, while producing lower highs and lows.Â With momentum like this, its basically stating the line of least resistance is to the downside and the garrison at 1.55 is likely to come under attack again, barring any election hoopla that changes the fortunes for this pair.
The intraday 1hr chart also supports this as it just activated a nice strong Ichimoku sell signal by posting a downward crossover of the Tenkan line (white) over the Kijun line (red) below the cloud which is the strongest sell signal one can get via Ichimoku models.Â Since the crossover, the pair has gone on a 420 pip run and has not hit the brakes at all.Â Although intraday momentum is diverging a bit with a nice double bottom, expect the upper portion of the cloud or kumo to offer some stubborn resistance.