Forex Strategies

It took the EUR/USD 4 weeks to advance from 1.2795 to 1.3415, but it only took it 3 days to erase half of such gains: the pair stands by the end of the week around the 50% retracement of its latest bullish run at 1.3106. The main reason behind the movement was brought by FED’s Chairman Ben Bernanke past Wednesday, when talked about QE exit strategy: he did not gave a certain date, nor changed the Central Bank requirements to achieve such target, he only explained how they will taper, when the time comes. That was enough to made EUR/USD shed 100 pips in a blink and built the bearish momentum, but it was the IMF menacing to halt payments to Greece, what gave the pair the coup de grace.The daily chart shows price broke below its 20 SMA, converging now with the 38.2% retracement of the same rally around 1.3180, and indicators heading strongly south near their midlines, suggesting another leg lower could signal the beginning of the run towards 1.3000, key psychological support. With bulls in charge for so long, one should expect they are not yet ready to give up, and some buying pressure may surge on approaches to the level. But if buyers remain mute, the next target for the pair comes at 1.2880, and could be achieved as soon as this week.

Some profit taking or short covering, will find resistance around mentioned 1.3180 area, although stronger resistance comes at 1.3240/50 price zone, that probe strong in the past. Only above this last the pair will be able to breathe and attempt to recover the lost ground.




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GBPUSD: 1.5415
Short-Term Trend: sideways

Outlook:

GBP rallied to 1.5750 earlier last week but then declined sharply. So there is now a high chance that wave C of (B) is complete. And if that's the case, we will see further sharp losses this coming week twd 1.5260 1st and then to 1.5000. Ultimately I do not expect a significant bottom before 1.4560 level.
On the upside, only a move back abv 1.5680 will negate this bearish view and will actually turn the daily chart positive.

Strategy: Shorts favored here against 1.5700.


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As can be seen from the following trade alert that I received recently, EUR/JPY is expected to reach the Key Resistance Level 131.41 (type Approach) in 8 trading days. The stop-level for this bullish forecast is set by Autochartist at 123.0638. The price recently corrected sharply up (at A) from the combined support zone made out of the support level 125.00 and 61.8% Fibonacci Correction of the previous daily upward price thrust from April (which earlier broke the daily Pennant, as you can see on the next chart below). The resistance level 125.00 stands close to the breakout level of the aforementioned Pennant. The proximity of the support zone around 125.00 increases the probability EUR/JPY will continue to move toward the target level 131.41 in the next 8 trading days.



The daily EUR/JPY chart below highlights the support levels mentioned above:





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EURUSD: Bear Pressure Sets Up For The 1.3050 Level.

EURUSD - A sell off the past week saw EUR turning below the 1.3242 level and reversing its previous week gains. This development now leaves the pair targeting the 1.3000 level and then the 1.2900 level on further downside. Its weekly RSI is bearish and pointing lower supporting this view. On the other hand, the pair will have to return above the 1.3242 level and the 1.3415 level to take back its last week losses. This if seen will expose the 1.3450 level with a cut through here targeting the 1.3550 level. All in all, EUR continues to retain its medium term upside bias but now faces corrective weakness.



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SP500 daily chart 6/24/2013 9:15AM ET



Broken trendline: The S&P500 has cracked a rising trendline going back to November 2012 as seen in the daily chart. Today’s action pushed below last week’s low, and with the breakdown, opens up the next support area: 1532-1539. The daily RSI reading is falling below 40, showing loss of bullish momentum to accompany this trendline breakdown. The market has turned sideways if not bearish.

1600: There is a pivot around 1598.50 up to the psychological handle of 1600. If today’s breakdown is followed by a pullback above 1600, the bearish outlook can be neutralized. The focus could be back toward the 1636 pivot, or a new falling trendline. A break above that trendline then can revive the bullish outlook with focus back to 1687.4.


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EUR/USD 1H chart 6/24/2013 7:20AM ET



1.31, trendline: EUR/USD started the week posting new lows, down to 1.3077, but then returned to around the 1.31 handle by the start of the 6/24 US session. The 1H chart shows the market resolving a bullish divergence with the RSI, and consolidating around 1.31, with a high early this week at 1.3122. There is also a falling trendline from the 1.3415 high that is being tested.

Upside break: A break above 1.3122 should clear this trendline and signal some intra-session bullish correction, with a projection of about 45 pips higher (using the width of the consolidation).

50% retracement, 200SMA: While the 1H chart shows a bearish market, the 4H chart shows more of a bearish swing within a sideways market. The 200SMA in the 4H chart is relatively flat so there was no trend either way, though you can say that there is actually still a bit bullish bias as price holds above the 200SMA. It is also consolidating around 50% retracement.

Downside break: I noted the case of a bullish break, but a break below 1.3075 would signal further decline with 61.8% retracement in the near-term, then the 1.30 handle next. This strong bearish swing that came as an FOMC-reaction can drive EUR/USD toward the May lows around 1.28, or even the 2013-low at 1.2744, but it would not be surprising if there was a significant pullback first, or if the market becomes a lot more choppy at latter parts of this bearish scenario.

EUR/USD 4H chart 6/24/2013 7:30AM ET




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GBP/NZD continues to advance toward the hourly Key Resistance at 2.0063 (type Approach) identified by Autochartist. The price is expected to reach this Key Level in the following 2 trading days. This forecast is aligned with the predominant uptrend visible on the daily GBP/NZD charts. The resistance level 2.0063 coincides with the monthly resistance high, which earlier reversed the weekly upward price impulse in September of 2012, and has not been touched from that time. Considering the strength of the uptrend affecting this currency pair – there is a strong probability GBP/NZD will re-test the resistance at 2.0063 in 2 days.



The weekly GBP/NZD chart below demonstrates the earlier price action near the Key Level 2.0063:





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EURJPY – A strong rally was seen from the July 202 low (94.09). This resulted in 7 positive monthly performances in 9, until the high trade of 133.80 was posted in May. A bearish ‘Outside Pin Bar’ week was then posted, often a signal of exhausted bullish momentum and the start of a downward bias. Although trading has been mixed and volatile from this high, the cross did trend lower. We look for these losses to extend over the next 2 quarters as a 3 wave corrective pattern plays out. Although gains were posted last week, all trading was within the preceding weeks range and spikes (rejections) were seen close to the Daily cloud top for the last 2 days of last week. The rally was sold and the dip bought resulting in EURJPY posting little net change yesterday (for the 2nd day in succession). This move lower can be seen as a corrective flag on the intraday chart with a bias to eventually break higher (towards our medium sell zone). This has resulted in intraday outlook being mixed. Mixed Signals – Buy at 127.15 or Sell at 128.13 (45 pip stop). Buying at 127.15 and we look to 128.13 and 129.00 (channel top). Selling at 128.13 and we look to 127.50 and 127.13.




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OIL moved nicely higher in the last few sessions and found a resistance around 96.00 area after a five wave move. So, current falling price action is actually not a surprise, because we know that after every five wave move, reversal will follow. This reversal lower is probably wave b) of incomplete larger three wave bounce from 92.65 low. Be prepared for a decline down to 94.00 area in the near future.

OIL 1h


OIL 4h



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NZD/USD 1H chart 6/25/2013 7:45AM ET



Consolidation range: The NZD/USD is coming off a downswing since retreating from the 0.8135 high. Then after finding support at the 0.7682 level, it has been consolidating roughly between 0.77 and 0.7807. The 1H RSI is stuck between 40 and 60, reflective of consolidation momentum.

Breakout scenarios: A break above 0.7810 can open up the 200-hour SMA, or a support/resistance pivot area in 0.7890-0.7907. This is a correction rally scenario against a prevailing downtrend seen more clearly in the 4H chart. A break below 0.77 and 0.7680 would simply continue a trend that is intact. Using the width of the consolidation range, the break down opens up about 120pips lower, to 0.7560. We start to see some important support pivots around 0.7470 from the weekly chart, but for now there is still some room to the downside without important support.

NZD/USD 1H chart 6/25/2013 7:45AM ET




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