EurUsd Printing fresh new highs is effortless for EURUSD these days, and we have now cleared the 1.3758 peak from last week to touch the heady heights of 1.3861. We are still looking for the bullish cup & handle pattern that activated back on 18 Jan to reach its 1.4035 target, but we are now approaching levels where overstretched longs may struggle. For a start, we are now within a stone's throw of 1.3896 -a level which represents the 61.8% fibonacci retracement of the entire sell-off from 1.5145 to 1.1876 (the entirety of the price action in 2010 and the last couple of months of 2009). Beyond there we see 1.3975 (9 Nov high), the psychologically important 1.4000 level, 1.4085 (8 Nov high) and 1.4281 (4 Nov high). In spite of our shift to a neutral stance in the short-term at these levels, we still hold a very bullish bias over the medium and long term. Expect first supports to come into play at 1.3650 (lower edge of a 2-week uptrend channel), 1.3511 (100-day moving average), 1.3540 (24 Jan low), 1.3420 (38.2% fibonacci retracement of the rally 1.2874 -1.3758), 1.3397 (20 Jan low), and 1.3245 (17 Jan low).
GbpUsd After the 2-3 week downtrend broke on Monday, GBPUSD has rallied hard and not looked back! Just this morning we look to be launching an assault on the major 1.6185 resistance level (9-12 Nov highs), and there is plenty of room for further appreciation to come. Above 1.6185, the anticipated pockets of supply are few and far between, indeed the next one is only eyed at 1.6300 (4 Nov high), with another long gap until 1.6460 (19 Jan 2010 high). Like other risk correlated trades, buyers on dips abound; expect that formerly stubborn resistance at 1.6010-20 to now represent the first area of support, followed by the back side of our old downtrend at 1.5955. Other supports seen at 1.5823 (31 Jan low), 1.5751 (which caught the sell-off after the GDP release), and 1.5718 (13 Jan low).
UsdJpy Very little change in the outlook for USDJPY today; the bears are still in the driving seat, and we have now dipped as low as 81.31. Most bullish strategies that were initiated while the 81.85 -83.20 range was intact have now been conclusively negated, so this now becomes solely a sell on rallies game. Should we break below today's 81.31 low, next support levels are seen at 80.95 (31 Dec low), 80.53 (9 Nov low) and 80.24 (31 Oct low) -but then we have nothing but thin air until the all-time low from 1995 at 79.75. We get a bounce higher, expect pockets of supply around 82.25 (31 Jan high), 83.00 (psychological resistance), 83.21 (27 Jan high), 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 on the first test.
UsdChf Neither comments from the SNB's Jordan about the franc's massive appreciation, nor a round of terrible Swiss retail sales could hinder the downside progress of USDCHF, and we have slid closer to testing the all-time low 0.9301 (seen 31 Dec). Adding to our bearish conviction, the daily chart reveals a bearish engulfing candlestick pattern which suggests more downside is on the cards today. So far on this sell-off we have managed to hit 0.9331 lows, but with rallies practically non-existent and selling opportunities poor, we prefer to wait for the 0.9301 level to break before we initiate any fresh short trades. Once 0.9301 has broken, the risk-reward profile would look far more attractive, and the entry levels less significant compared to the sprawling downside below. First resistance levels come in at 0.9480 (27 Jan high and the upper edge of a 3-week downtrend channel), 0.9520 (former support turned resistance), 0.9687 (14, 20 & 21 Jan highs), 0.9784 (11 Jan high), 0.9850 (12-13 Dec highs) and 1.0065 (1 Dec high).