Technical Analysis

Several words about the EUR/USD future.
Resistance (daily close) : 1.3182, 1.3364, 1.3590 and 1.3778. After that 1.3958, 1.4186 and 1.4400. Break of the latter will give 1.4490, 1.4692

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Being contained by the support of upward trend line from 1.4831 to 1.5034, GBPUSD rebounded from 1.5197, suggesting that the downward movement from 1.5411 has completed. Further rise to test 1.5411 resistance would likely be seen, a break above this level will indicate that the uptrend from 1.4831 has resumed, then next target would be at 1.5600 area. Key support is now at 1.5197, only break below this level will suggest that the uptrend from 1.4831 had completed at 1.5411 already, then the following downward move could bring price to 1.4500 zone.


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Nearly a month ago we gave you anther perspective on the U.S. equity rally over the past few years, as we highlighted the Dow Jones Industrial Average priced in Gold (rather than USD’s). While the ratio was clearly a long way away from its All-time high of 44 in July 1999, there was signs that “things could be moving in the right direction for the Dow priced in Gold, as weekly RSI has finally broken above the key 65 level, which suggests the overall downtrend could be coming to an end. However, before expressing too much optimism we ultimately need the ratio to break above its prior highs (9.99) before the technical downtrend, which has spanned nearly 13-years, can be defined over.”
Sure enough, roughly two weeks later we saw a precipitous decline in Gold while U.S. equities remained somewhat firm. Accordingly, this sent the Dow/Gold ratio above its prior high from August 2009 of 9.99, which confirmed the break higher in weekly RSI from several weeks before and has effectively has ended the technical downtrend since 1999 – See Exhibit 1. Over the ensuing weeks/months, it may be prudent to see how the ratio performs into the prior March and July 2008 lows between 11.50 & 12.00, followed by the 2008 highs around 15.00 thereafter.

In not being biased to the Dow, we also decided to take a look at the spread between the S&P500 and Gold (see Exhibit 2). Interestingly, we saw the S&P500 rise above the price of gold for the first time since April 2010 on April 4th – Highlighted on Twitter, which ended up foretelling the shift in investor sentiment from that of the ‘safe-haven’ gold, to something with a higher beta

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EUR/USD Current price: 1.3036

View Live Chart for the EUR/USD


The EUR/USD rose as high as 1.3092 this Thursday, mounted on better than expected data across the world: early Europe, increasing UK GDP diluted fears of a triple dip recession for the country, while US weekly unemployment claims improved to 339K. Still the pair has found sellers near the 1.3100 level, retracing most of its early gains and trading back below 1.3040. The hourly chart shows 20 SMA around the level and price breaking lower, while indicators stand above their midlines, with no upward momentum. Overall, range persists, with price now addressing towards the bottom in the 1.2970/1.3000 area, where buying interests wait. *
Support levels: 1.3000 1.2970 1.2925*
Resistance levels: 1.3040 1.3070 1.3115
GBP/USD Current price: 1.5457

View Live Chart for the GBP/USD (select the currency)

GBP/USD maintains its upward momentum despite largely overbought in the hourly chart, holding near its daily high of 1.5479. Better than expected UK GDP figures, suggest the economy may not be as bad as suspected, and with market in risk on mood, Pound is the daily choice. Having advanced already over 200 pips today, some consolidation could be expected, but as long as above 1.5420, 38.2% retracement of the latest daily fall, the upside continues to be favored, with scope now no test levels above the 1.55 mark.*
Support levels: *1.5225 1.5190 1.5150
Resistance levels: 1.5280 1.5300 1.5330*
USD/JPY Current price: 99.27

View Live Chart for the USD/JPY (select the currency)

The USD/JPY trades lower in range, having tested levels sub 99.00, recovering later on positive US employment data. However the hourly chart shows price being capped by 100 SMA currently around 99.35 and immediate resistance, while indicators stand in negative territory. In the 4 hours chart, technical stance remains neutral, with price set to continue trading within the 98.60/99.70 range.
Support levels: 98.90 98.60 98.20
Resistance levels: 99.35 99.70 100.00*
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EURUSD stays within a downward price channel on 4-hour chart, and remains in downtrend from 1.3201. Resistance is at the upper line of the channel, as long as the channel resistance holds, the downward movement could be expected to continue, and deeper decline to 1.2900 are is still possible. On the upside, a clear break above the channel resistance will suggest that the fall from 1.3201 has completed, then another rise towards 1.3500 could be seen.




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USD/JPY: 1-hour


Yo homes, check out USD/JPY on the hourly timeframe. Is that a symmetrical triangle? With price making lower highs and higher lows, it looks like it is! A good way to trade this setup is to wait for a breakout. So keep tabs for a break above the high somewhere around 100.00 if you plan on going long. On the other hand, if you have a bearish bias for the pair, watch out for a close below 98.50.


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EUR/GBP was the main mover overnight amid diverging central bank expectations. The better-than-expected UK GDP data has lowered expectations of any further QE whilst the market is again focussing on a possible 25 bps rate cut by the ECB next week.
Today’s BOJ meeting is not expected to produce any major surprises but care is warranted nonetheless around the time of the statement. US GDP data later tonight will also add to volatility.
EUR/GBP has fallen back below its 100-day MA but is still stalling ahead of a daily low at .8410. Any intraday rallies now towards .8500 are likely to meet with plenty of willing sellers. I’d suggest trading near the edges of this range with a bearish bias.

The clean break above previously strong cable resistance at 1.5410 suggests that we may now see a test of strong resistance levels at 1.5590 where the 100-day MA and a 50% retracement level sit.

EUR/JPY is still trading inside of a wedge formation but will break out of this very soon. I have no particular bias either way but these wedge formations are usually consolidative suggesting that this will break higher.

EUR/USD is again trading around 1.3000 and we may need to get used to this! Sovereign names are still buying dips towards 1.2950 but EUR sentiment is turning bearish on the crosses; sounds like a perfect recipe for range trading.
USD/JPY is still being dominated by the big barrier protection ahead of 100.00, with big players selling huge amounts just ahead of it and then buying these back on any decent dips. Nice money if you can get it!
AUD/NZD broke below a weekly low at 1.2100 but the failure to close below there will be slightly disconcerting to the bears. AUD/USD should trade between recent lows (and Sovereign demand) at 1.0220 and strong technical resistance (recent highs and Fibo) at 1.0360.
Good luck today and TGIF


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PLN, HUF and RON weekly snapshot – Pressure on the Euro hurts the PLN and HUF, RON gains

Polish Zloty (EUR/PLN) – Breaking a crucial resistance lifts the EUR/PLN higher

It was not an easy week for emerging markets currencies. Weak macro data from the Eurozone, especially from Germany, lifted more questions about the ECB’s reaction. Now everybody is expecting Draghi to do…something. Honestly, the ECB does not have many possibilities and in this case next Thursday’s Draghi’s press conference should be interesting. In Poland macro data has not surprised either, meaning readings were weak. The unemployment rate declined slightly but still remained well above 14% while retail sales increased only by 0.1% in March (yearly basis). The pressure on the Euro as well as weak macro data hurt the Zloty. Does this mean the depreciation will continue? Not necessarily. Much depends on the upcoming week’s ECB press conference and the NFP reading which will shape market sentiment. The polish MPC certainly needs to follow how the situation evolves. A series of weak macro readings gives fuel to proponents of interest rate cuts, me being one of them. I still believe the MPC should not wait and act now rather than wait like it did last year.


Pic.1 EUR/PLN D1 Chart
As we see on the chart, at the beginning of the week the EUR/PLN blasted through the 4.12 resistance and continued its upward move all the to reach 4.16, which is at the 61.8% retracement level of the last downward move. I expect the the market to continue heading upwards, but a corrective movement should happen. The stochastic oscillator shows the market is heavily overbought. The closest support is at 4.1440 and if broken the market will target 4.1350. If the EUR/PLN breaks through the resistance, the way to this year’s highs of 4.20 will be opened.
Hungarian Forint (EUR/HUF) – MNB cuts interest rates again

During the week when Italy could celebrate the break of political deadlock and speculation about ECB throwing a life belt for the markets on next week’s meeting, the forint quietly but steadily lost ground against major counterparts.
Hungarian macro data didn’t encourage risk taking either as Hungarian households’ spending on consumption fell 2.1 percent (yoy) and earlier on Monday a think tank report suggested rising trend in Hungary's economic sentiment also broke. The main event of the week was MNB’s rate setting, where the monetary council according to market expectations conducted a 25 basis point rate cut to all time low 4.75 percent. Habitually the MNB came out only with a short statement as there will be no press conferences after rate setting. Important message for investors is that disinflationary pressures are likely to prevail in the future thus allowing MNB to proceed with gradual cuts.


Pic.2 EUR/HUF D1 Chart
Technically, a structured weakening is clearly visible on the EUR/HUF chart, as price is heading north in a relatively narrow channel. Weekly high was reached on Thursday but noticeable the 302.5 peak failed to break important resistance level of the daily 61.8 fibo level. In case of further failure attempts forint bulls will take courage and with stops above the 302.8 line will try to turn the bullish trend.
Romanian Leu (EUR/RON) – The seasonal RON mussle-flexing

When you get in one place a reasonable risk-taking environment, local T-notes paying above 5% (most recent 400 mil. RON 10-year issue yields 5,23%) and seasonal cash flowing into Romania from workers abroad returning to the country for Orthodox Easter, you may very well get the kind of calm EURRON downtrend that we have seen. Investors have also been encouraged by current account surplus in February and the overall trend of auto-related exports, which hae received a boost from the Ford ramping up of production. Lower liquidity played to RON’s advantage, and it may continue to do so next week (as it is the last week before Easter), provided there is no major outbreak of risk.
The technical analysis shows a clear downtrend. The channel encounters support at 4.3260 and then 4.3080, previous local lows. Although the short-term bias is still bearish, there is at least one technical reason to be mindful of a reversal: the morning star candle of the Friday action. Bulls will need to be courageous enough to push above 4.3430, therefore leaving the channel before any attempt to test 4.3630 (and then, maybe 4.3789).


Pic.3 EUR/RON D1 Chart



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USDJPY remains in uptrend from 77.14 (Sep 13, 2012 low), the price action in the trading range between 95.82 and 99.94 is treated as consolidation of the uptrend. Support is now at 95.82, as long as this level holds, the uptrend could be expected to resume, and another rise towards 105.00 is still possible.Resistance is at 99.94, a break above this level could signal resumption of the uptrend.For long term analysis, USDJPY is in uptrend from 77.14. Further rise towards 105.00 is possible over the next several weeks.



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$EURUSD
What Forex Target Traders See: We are currently sitting @ 1.3042 in a wedge so this could go either way. A couple of different scenarios. 1: bull move- a break to the S5 @ 1.2892 with resistance at 1.3150 2: Bear move- a break to the R3 @ 1.3099 with support at 1.2846. The average (14 day) daily true range (ATR) for the pair currently is 99 pips.*
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$USDJPY
What Forex Target Traders See: We are currently @ 98.11 and have broken down out of a rising wedge which means continued bearishness. Looking to move to the S5 support after a pullback to the 0.214 fibo. Longer term target is the S6 @ 93.80. The average (14 day) daily true range (ATR) for the pair currently is 121 pips.*

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$GBPUSD
What Forex Target Traders See: Cable is currently @ 1.5486 and has been testing the Day chart trend line. A break of that would bring the shorter 240 minute trend into play with the 5th wave r5 target as the immediate target @ 1.5577. Look to square up at the R6 @ 1.5643 if that happens. A more likely scenario is a pullback to the R3 @ 1.5344 and then go for the top again. The average (14 day) daily true range (ATR) for the pair currently is 103 pips.

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$AUDUSD – A great smooth currency for Newbie’s!
What Forex Target Traders See: Aussie is currently @ 1.0282- 6 pips from last weeks close –in a channel pattern which is bearish. We have a day chart bottom @1.0242 area which could be a bounce point. A breakdown of the day chart bottom would target the 1.0183 Day chart bottom and maybe a bounce there. The average (14 day) daily true range (ATR) for the pair currently is 92 pips.


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