EurUsd EURUSD is still holding up rather nicely at the start of this week, and has even nudged to new highs of 1.3647 in the Asian trading session -breaching the resistance level at 1.3635. The bullish cup and handle strategy we entered on the break of 1.3330 is therefore in very good form, some 250 pips in the money on its way to a target of 1.4035. We have decided to set our stop on this position just below the 2-3 week old trend channel (connecting the 11, 12 & 20 Jan lows), which now comes in at 1.3515. Clearly the benefit of using this steep uptrend as a trailing stop is that we can safeguard a very healthy chunk of the profits made so far; but it does increase the possibility of getting stopped out prematurely and missing a subsequent move to the 1.4035 target. There is still quite a way to go until that ambitious target however, so watch for sellers lurking at 1.3635 (23 Nov high), 1.3785 (22 Nov high), 1.3825 (10-11 Nov highs), and 1.3975 (9 Nov high). Supports are noted at 1.3397 (20 Jan low), 1.3245 (17 Jan low) and 1.3145 (12 Jan high former resistance).Below there we have a large gap before major support at 1.3085 (the 29 Dec pivot and 13 Jan low).
GbpUsd After bouncing off strong support at 1.5835 on Thursday, GBPUSD has recovered very well; although sticky resistance just above 1.6000 levels have hampered the pair's ability to re-test the 1.6060 highs (printed on 18 Jan). The key resistance levels to watch this week will be 1.6010-20 (20-21 Jan peaks), 1.6060 (18 Jan high) and 1.6095 (19 Nov high). After that is a long gap until 1.6185 (9, 10 & 12 Nov triple-high). Near-term support still resides at 1.5835 (17 Jan & 20 Jan lows), but we would not be alarmed to see a deeper correction to 1.5810 (14 Jan low) or 1.5785 (former resistance now turned support) -indeed we'd probably see the latter as a good level to add some more. Our bullish bias might start to wane if we saw a serious challenge threaten the 1.5718 support (13 Jan low).
UsdJpy USDJPY is loitering just within the upper limits of its 2-3 week downtrend channel (trendline currently 82.90), having peeked higher a couple of times at the end of last week, but not yet managed to rally cleanly above it. Should another bullish leg higher occur today, first resistance is the 20 Jan high 83.12, followed by 83.50 (11 Jan high), 83.70 (7 Jan high), and the formidable old range ceiling from early December at 84.40. This latter level managed to contain numerous rallies back on 29 Nov, 1 Dec, 2 Dec, 8 Dec, 13 Dec and 16 Dec -so it's likely to be a stubborn barrier should we manage to get back up there. On the flipside, if the bulls fail force a break higher, expect another return to 82.50 levels where the pair settled on Friday (and indeed bounced again early this morning), with the possibility of an extended move to 81.70 (4 Jan European/US session low), 80.95 (31 Dec low), 80.24 (31 Oct low), and the all-time low from 1995 at 79.75.
UsdChf For those playing either the head & shoulders pattern or the bearish flag pattern on the hourly chart, Friday's sell-off back towards 0.9550 came as very welcome respite from the short-squeeze a day earlier. But we are still not out of the woods just yet. The peak of the squeeze was 0.9687 -identical to the 14 Jan high (and second shoulder of our head & shoulders pattern), and that level MUST hold for our two bearish scenarios to succeed. Should the bullish momentum return to ruin our party, resistance levels above only come in at 0.9784 (11 Jan high), 0.9850 (12-13 Dec highs) and 1.0065 (1 Dec high). As a reminder of our 2 current short strategies; the first is a bearish flag pattern with a target around 0.9480, and the second is a head and shoulders pattern which has a neckline around 0.9605 and a target at 0.9425. Only support noted on the horizon is 0.9530 (former resistance now turned support) as beyond there we have nothing until the all-time lows of 0.9301 seen on 31 Dec.