The Forex markets continue to trade without direction this week as traders await the annual Jackson Hole Symposium where all eyes are on Bernanke and whether there will be QE3, or some kind of stimulative measure for the US economy. Let's take a look at the range-bound markets again in the EUR/USD, GBP/USD, USD/JPY, and USD/CHF, and some short-term scenarios that can arise if the market breaks out of these ranges.
NY morning update: There is an initial USD-negative move after our 8:30AN EDT releases: July Durable Goods (4.0%, forecast: 2.1%, prev: -1.3% (revised from -1.9%). Core Durable Goods (0.7%, -0.3%, 0.6%, 0.1%). This initial reaction however does not look strong so far, and this may all be noise leading up to the more critical event risk (Jackson Hole). The GBP/USD also has a slightly more bearish bias, as we saw no USD-negative reaction in this pair.
- Resistance 2: 1.4517
- Resistance 1: 1.4450 (broken)
- Support 1: 1.4350
- Support 2: 1.4280
- The scenarios outside of the outer boundaries of the range remain the same as last reported, but let's reiterate:
- A break below 1.4280 and the 1.4250 opens up near-term support at 1.42, then the 1.4070-1.41 zone. This would still be in the context of a larger scale consolidation.
- A break above 1.44 opens up 1.4517 in the short-term, and confirms a bullish stance the EUR/USD has in the 4H and Daily Chart.
- Above 1.4517, the market opens up the 1.4555 pivot then the 1.4696 pivot, then the 1.4940 2011-high.
- Resistance 2: 1.6615
- Resistance 1: 1.6530 (middle of range)
- Support 1: 1.6450 (range support)
- The GBP/USD is a bit bearish within a consolidation mode. It has been flat, but now is more like a triangle congestion.
- A close below 1.6450 in the 4H chart eyes 1.6365, and 1.63 (78.6% and 61.8% retracement levels).
- To the upside a break above 1.6615 re-establishes the bullish mode towards at least 1.6745, a break above which looks at the 1.70 psychological resistance.
- Resistance 2: 77.23
- Resistance 1: 77.00
- Support 1: 76.35
- Support 2: 76.00
- USD/JPY is stuck in a tight range after a sharp decline from 80 area.
- We cracked 76.00 and established an all-time low at 75.95. A break below this again will open up the 74.80-75. Here we have a higher chance of intervention again, so the bearish outlook should not be too aggressive.
- On the other hand, a break to the upside signals a move against a very bearish market. The breakout projection targets 78.50. The 50% retracement level is near 78.00, and the 61.8% retracement is near 78.60.
- Resistance 2: 0.8000
- Resistance 1: 0.7950
- Support 1: 0.7835
- Support 2: 0.7766
- The USD/CHF is edging up a bit, and in the 4H chart we see the market held below the 200SMA near 0.7950.
- If we break above or below the outer boundaries of this sideways range, the breakout targets remain the same as last reported. Let's reiterate.
- Above 0.80, we can look for a short-term rally towards 0.8080, then 0.8280.
- Below 0.7765, we can look for a slide towards 0.7612 pivot, or 50% retracement at 0.7540.
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Fan Yang CMT
Chief Technical Strategist