Technical Analysis

EUR/USD Current price: 1.3076



The EUR/USD was hit after the US opening, when Mario Draghi in a press conference in Rome, stated that the ECB is ready to cut rates again if necessary. After a dull European session that saw the pair trading in a 20 pips range for most of a day, the news put the common currency under pressure, sending EUR/USD to the 1.3050 price zone. Bounce after the low was again supported by US stocks that hold at record highs as the day comes to an end. Anyway, and despite the intraday movements, Monday has add no definition to EUR/USD trend: the pair continues in its 1.30/1.32 range as it has been for nearly a month already.
As for the short term, the hourly chart maintains a bearish tone ahead of Asian opening, with 20 SMA gaining bearish momentum above current price and indicators standing in negative territory. Buyers however will surge in dips up to 1.2970, 23.6% Fibonacci retracement of the 1.3710/1.2744 daily fall.
Support levels: 1.3070 1.3040 1.3000
Resistance levels: 1.3115 1.3144 1.3190*

EUR/JPY Current price: 129.90



The EUR/JPY surged up to 130.40 before easing back towards it daily opening, about to end the day with no changes. Once again, failure on USD/JPY to firmly advance over the 100.00 level maintains buyers limited, and even force some profit taking, helped no doubts by Mr. Draghi. The EUR/JPY hourly chart shows indicators flat around their midlines, while moving averaged stand well below from current price, first one around 128.80, also strong static support level. In the 4 hours chart technical readings maintain a positive tone, although with no strength: as said yesterday, the ability to extend gains, will depend mostly on EUR self strength, something not quite clear these days.
Support levels: 129.70 129.30 128.80
Resistance levels: 130.30 130.80 131.10

GBP/USD Current price: 1.5541



GBP/USD edges lower but mostly range bound, with still no clear direction midterm: the pair has rose to the 50% retracement of its latest daily fall at 1.5605, and despite unable to break higher, there are no signs pointing for an interim top. Ahead of Asian opening, the hourly chart shows price steady below 20 SMA and indicators aiming to recover below their midlines, while in the 4 hours chart technical indicators turned bearish, and accelerate lower, suggesting a deeper correction underway: key support is now the 1.5490 level as once below, the pair has scope to extend its slide up to 1.5420, 38.2% retracement of its latest daily fall.
Support levels: *1.5530 1.5490 1.5450*
Resistance levels: 1.5580 1.5610 1.5650*

USD/JPY Current price: 99.34



The USD/JPY holds near the daily high of 99.45 and continues pressuring higher with the hourly chart showing indicators in positive territory, although flat. 100 SMA accelerates higher, still well below current price, around 98.10, and below 200 one, which suggest the upside is not a done deal yet. In bigger time frames, the dominant trend is still clearly bullish, yet unless a strong acceleration higher, there are no signs suggesting further gains ahead.
Support levels: 98.80 98.40 98.10*
Resistance levels: 99.45 99.70 100.00

AUD/USD: Current price: 1.0250


The AUD/USD again bounced from 1.0220, third time in less than 2 weeks, although holds now below 1.0260 level, immediate resistance. The hourly chart shows price below a strongly bearish 20 SMA converging with mentioned static resistance, while indicators hold in negative territory, after correcting oversold readings. In the 4 hours chart price also stands below a bearish 20 SMA, although indicators aim higher around their midlines, giving the pair a more neutral stance. The dominant trend in the pair is still bearish, with move upwards seen as selling opportunities. RBA meeting today however, may set the tone, as there’s a chance of a rate cut: if so, expect the pair to finally break below mentioned floor.
Support levels: 1.0220 1.0180 1.0130
Resistance levels: 1.0260 1.0300 1.0335*

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BETA - Propareos levels (areas where probabilities of price action reversal or saturation reach 90%; valid till 15:00 GMT):

• EURUSD: 1.3155-1.3170 on the upside, 1.3030-1.3055 on the downside.
  
• AUDUSD: 1.0345-1.0360 on the upside, 1.0200-1.0215 on the downside.
  
• USDJPY: 100.30-100.45 on the upside, 98.35-98.50 on the downside.
  
• GBPUSD: 1.5610-1.5625 on the upside, 1.5505-1.5520 on the downside.
  
• USDCAD: 1.0110-1.0125 on the upside, 1.0015-1.0030 on the downside.
  
• NZDUSD: 0.8560-0.8575 on the upside, 0.8475-0.8490 on the downside.
  
• EURJPY: 131.10-131.25 on the upside, 129.00-129.15 on the downside.
  
• EURGBP: 0.8465-0.84800 on the upside, 0.8365-0.8380 on the downside.
  
• USDCHF: 0.9405-0.9420 on the upside, 0.9265-0.9280 on the downside.
  
• AUDJPY: 103.00-103.15 on the upside, 99.75-99.90 on the downside.
  
• EURAUD: 1.2845-1.2860 on the upside, 1.2645-1.2660 on the downside.
  

Warning! Propareos levels do not take into account fundamental developments. Their validity is reduced on days when the NFP is released and when Central Banks change their interest rate.




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EUR/USD Current price: 1.3114



Uneventful European session so far with London off, sees majors trapped in a tight range, with the EUR/USD hovering in the 1.3100/40 area, lacking technical definitions so far today. *The hourly chart shows price testing a flat 20 SMA around 1.3115, while indicators hold in neutral territory, while the 4 hours chart also presents a neutral stance, although 20 SMA heads south above current price offering short term resistance around 1.3130. With US players hunger for risk, chances of further slides are limited today, although 1.3130/50 area is still a strong resistance level, and needs to be broken to confirm some upward momentum in the pair.
Support levels: 1.3070 1.3040 1.3000
Resistance levels: 1.3140 1.3190 1.3225

GBP/USD Current price: 1.5551



The GBP/USD eases some today, although also maintains the range. The pair trades below 20 SMA in its hourly chart, with indicators barely below their midlines and turning flat, showing no real strength at the time being. In the 4 hours chart a slightly bearish momentum is building up, as price crosses towards the downside its 20 SMA, while indicators gain bearish tone. Still, the pair has been finding buyers around 1.5490 strong static support, and only steady losses below that level will favor a downward continuation today.*
Support levels: *1.5540 1.5490 1.5450*
Resistance levels: 1.5610 1.5650 1.5690

USD/JPY Current price: 99.18



The USD/JPY holds above 99.00, after extending its gains up to 99.44 during the Asian session. The hourly chart shows that, while indicators already corrected extreme overbought readings, price held steady, which suggest buyers remain in control of the pair. Further upward momentum today will depend on US stocks aims for new record highs, with a break above 99.60 exposing 100.00 price zone.
Support levels: 98.80 98.40 98.10*
Resistance levels: 99.25 99.60 100.00

AUD/USD: Current price: 1.0224



Australian dollar continues easing against its American rival, testing the 1.0220 support ahead of the US opening, and with a strong bearish momentum in the hourly chart, that favors further slides. The pair however, has managed to bounce already twice from the area over the last few days, so an acceleration below the level is needed to confirm the downward continuation. In the 4 hours chart technical readings present a strong bearish tone also, with 20 SMA now offering dynamic resistance around 1.0260, attracting sellers in case of a short term bounce higher.
Support levels: 1.0220 1.0180 1.0130
Resistance levels: 1.0260 1.0300 1.0335*

Analysis for May 7th, 2013
EUR/USD

The EUR/USD currency pair completed a correction towards the ascending wave formed last Friday. According to the main scenario, the price may growing up to reach the target at 1.3190. However, an alternative one implies that the pair may break the last week’s minimum. If it happens, the price may reach the level of 1.2880.



GBP/USD

The GBP/USD currency pair continues moving inside the final part of the third ascending wave. We think, today the price may return to the level of 1.5615 and then start a descending correction towards the target at 1.5325.



USD/CHF

The USD/CHF currency pair continues forming an ascending correction. According to the main scenario, the price may continue falling down to reach the target at 0.9200. An alternative scenario implies that the pair may continue growing up towards the level of 0.9450 and then move downwards to reach the level of 0.9295, thus forming a consolidation triangle.



USD/JPY

The USD/JPY currency pair broke an ascending channel and started forming a descending structure with the target at 96.90. We think, today the price may complete triangle pattern, and then break its lower border to start a descending correction towards the level of 88.20.



AUD/USD

Australian Dollar is still forming a descending structure. We think, today the price may form a consolidation channel near the level of 1.0235 and then break it downwards to reach the target at 1.0155. Later, in our opinion, the pair may return to the level of 1.0235 and then continue falling down towards the main target at 1.0085.



GOLD

Gold continues moving upwards; right now, the instrument is consolidating near the level of 1466. We think, today the price may return to the level of 1490 and then start a new descending correction toward the target at 1415.




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The Mexican Peso has been grinding steadily higher over the past few days on the back of US equity market strength, as the S&P500 broke above the key 1600 level on Friday. This is not really surprising as there is a historical strong inverse relationship between USDMXN and the S&P500. That said, while US equities have continued to make new All-time highs, USDMXN just recently took out the long-term 61.8% retracement (of the 2008-09 rally) around 12.04/0500 and is merely testing its respective 2013 lows near 12.0190/95.
**
Should the 2013 low give way, next potential levels of support:

• 12.0150/70 – June 2011 high
• 11.4850/80 – 2011 Low

* * *However, one should be mindful of the fact that weekly RSI is not leading this move lower, as it has in the past – Although not preferred, this could potentially set the stage for a bullish divergence and may limit USDMXN downside.



Chart Source: Forex Charts by eSignal


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On Friday the 10-year yield saw its largest one-day rise since Sept. 14th 2012, surging around 12bps on the day. This move was prompted by the much stronger than expected April Employment report:

• April NFP: +165K vs. exp. +140K
• March NFP: Revised to 138K from 88K (+50K)
• February NFP: Revised to 332K from 268K (+64K)
• April Unemployment rate: 7.5% vs. exp. 7.6%

Technically, this saw the 10-year yield bounce from around 1.617% to test 1.75%, forming a massive bullish engulfing candlestick in the process. The move higher in yield did not come as a complete surprise as it was accompanied by a daily RSI bullish divergence. Monday’s continuation higher carried 10’s above the key 200-day sma around 1.755%, which opens up scope to a potential move higher.
**
Next levels of technical resistance after break above 200-day sma:

• 1.79/80% – 38.2% retracement (of the 2013 yield decline) & psychological relevance
• 1.81/83% – Convergence of prior highs/lows in 2013
• 1.84/85% – 55 & 100-day sma’s as well as the 50% retracement

That said, until daily RSI can break above the key 60/65 level, as while it remains below this level it’s indicative of an overall downtrend, traders may look to fade the rally higher in yield into one of the previously mentioned zones above.



Chart Source: Bloomberg, FOREX.com


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Major currencies should be let to evolve further price activity near term in order to cristalize potential supply and demand levels. A clear example of the lackluster*conditions*to accurately identify 'smart money' areas is the current erratic move in the USD index, which does not help the case to predict next near term direction. *
The short-term view on the contract is inconclusive, with the pair still trapped in a choppy profile. On the downside, 82.00 is the first near by area where buyers appear to be camped, as per May 6 bullish spike, while on the upside, sellers protecting 82.50, as per drop from April 26, are thought to be fading following*absorption*of offers on the May 3 explosive upmove. Further up, 83.00 round number should see decent offers clustered.*
Pay attention to the index location in order to find converges with USD intraday plays. Demand in the index should provide broad support to the USD, thus potentially increasing chances of a USD long play succeeding intraday. The same applies if playing USD short positions, with the odds further stacked in one's favour when the index faces supply. *

White boxes displayed represent supply/demand levels identified



Below, following the unprecedented RBA rate cut to 2.75% yesterday, we present a potential area of demand in AUD/JPY where the imbalance between buyers and sellers should still be notable. The uptrend saw corrective moves up until early April, which was followed by 5 days of explosive moves up, producing in the process a demand area around 97.70/96.85, as per April 1-4 consolidation. Any fast approach towards the area should see unfilled buy orders stacked at the level supporting the initial return of the bid tone.*



Note to all readers

At the most fundamental level, an exchange rate between a pair of currencies will rise because there is more demand for it, thus creating an imbalance between buying and selling interest at a particular level. On the supply side, the value of an exchange rate between two given currencies will be reduced as soon as supply exceeds demand.
The following analysis intends to dissect for the reader at FXstreet.com where large banking institutions have been recently busy buying and/or selling a particular pair and what is the likelihood of these activity continuing to show up at that particular level, with the ultimate aim of seeking to fill the remaining unfilled buy or sell orders. Note conventional technical analysis will not be conducted,with the sole focus being supply/demand areas.
No entry/stops/profit target levels will be given, as the intention ofthis report is to purely suggest where large institutions*akathe smart money - insiders and better informed speculators - are mostlikely to be actively selling or buying. Any trader should factor inadditional elements in order to understand the potentiality ofsuccess from a particular area.

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Majors

EUR/USD: LONG AT 1.3090 FOR REVISED 1.3300; STOP REVISED AT 1.3049
USD/JPY: LONG AT 97.70 FOR 99.95; ADJUST STOP 98.56
GBP/USD: BUY AT 1.5500 FOR A 1.5607 OBJECTIVE, STOP AT 1.5440
USD/CHF: POSS BUY AT .9315/10
AUD/USD: SHORT AT 1.0205 FOR 1.0100; STOP AT 1.0265
USD/CAD: SHORT AT 1.0100 FOR .9971 OBJ, REVISED STOP AT 1.0100
Crosses

EUR/JPY: LONG AT 128.50 FOR 132.05; REVISED STOP AT 128.34
EUR/GBP: BUY AT .8385 FOR A .8592 OBJECTIVE; STOP AT .8320

EUR/CHF: LONG AT 1.2320 FOR A 1.2391 OBJECTIVE, STOP AT 1.2285
EUR/CAD: POSS SELL
GBP/JPY: LONG AT 153.10 FOR 155.85, REVISED STOP AT 152.25
NZD/USD: SHORT AT .8420 FOR A .8308 OBJECTIVE; STOP AT .8490


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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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GBPUSD is in uptrend from 1.4831 (Mar 12 low), the fall from 1.5605 is treated as consolidation of the uptrend. Initial support is at 1.5447, and the key support is located at the upward trend line from 1.4831 to 1.5034. As long as the trend line support holds, the uptrend could be expected to resume, and one more rise to 1.5800 is still possible after consolidation. Resistance is at 1.5605, a break above this level could signal resumption of the uptrend.




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