Forex Strategies

Market Commentary

The US Dollar depreciated against most of the FX majors though the Aussie and the Kiwi remained under pressure. The Dollar Index (DX) on the other hand continued depreciating amidst flat trading witnessed across the asset classes; 81.20 still remains important support. The bias is weak though next leg of selloff is expected only on DX closing below 81.20 on daily basis.
The benchmark equity index of the Dow Jones Industrials Average (DJIA) seems to be over stretched though the major trend is still intact till DJIA manages to trade above 14860 ranges. Historic correlation between DX Vs DJIA the long term trend is still Dollar bearish till the Dollar Index is not closing above 88.40 with 84.50 ranges acting as intermediate resistance.

1.3370	1.3300	1.3220	1.3170
99.30	98.80	97.10	96.70
1.5690	1.5630	1.5470	1.5430
0.9390	0.9350	0.9300	0.9270
131.40	131.00	127.70	126.40
0.9510	0.9480	0.9380	0.9350

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GBP/USD 1H chart 6/11/2013 9:40AM EDT



Consolidation: The GBP/USD has been consolidating since retreating from the 1.5683 high. It has found support at 1.5488 so the consolidation is essentially between 1.5488 and 1.5683. The prevailing trend in the 1H chart is bullish, and you can see price holding nicely above a rising 200-hour SMA. so the bias going into consolidation is bullish.

RSI: The RSI reading has been holding above 40 and tagging above 70, a sign of persistent bullish momentum which remains intact as we get into the 6/11 US session.
Breakout, target/fibonacci resistance: Current price action puts the focus on the 1.5683-high. Above that and above the 1.57 handle, the 1.5764 is the 61.8% retracement of the 2013 downswing.


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EUR/USD 1H chart 6/11/2013 9:15AM EDT



Consolidation, outlook: The EUR/USD rallied during the 6/11 Japanese and European session but found resistance as it headed into the US session just before tagging the 1.33 handle. This level is resistance for the second time this month ,and is holding EUR/USD in consolidation roughly between 1.33 and 1.3175. Within consolidation, there is a pivot around 1.3230. Above this level, there is still bullish bias, especially since the prevailing trend in this time-frame is bullish. Below 1.3230, the market looks sideways, but only a break below 1.3175 should revise the outlook to bearish, especially since this is likely to break below a rising support as well.

RSI: The RSI has held above 40, which is a sign the market is maintaining EUR/USD bullish momentum in the 1H time-frame – there is bullish momentum bias.
A break below 40 would accompany price below 1.3175 as signs of topping.


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USD/JPY Daily chart 7:45AM EDT 6/11/2013



Priced in: It appears that the current level of stimulus provided by the BoJ is priced in the USD/JPY and other yen-crosses because yen weakness has stopped. The BoJ met during the 6/11 Asian session and decided to hold off any additional stimulus measures. Without further easing, the JPY is continuing a recent bout of strength.

Bearish reaction: The USD/JPY daily chart shows a market that has been bearish since the 103.72 high. After a pullback, the reaction to the BoJ decision is a strong bearish daily candle that signals continuation of the nascent downtrend. Note that the pullback has respected a recent falling resistance and treated the broken rising support as resistance. These are signs that bears are in control.

RSI, support/target: The RSI is breaking below 40, a sign that the bullish momentum in the daily chart is gone. Where might USD/JPY find support? The 38.2% retracement of the bullish trend since the 2011, and historic low of 75.55 up to 103.72, is at 92.96. There is also a support pivot at 92.55. The current downside risk is probably down to the 92.50-93.00 area. But first the near-term challenge is to break and clear below 95.00.


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Dollar remains under pressure across the board, with better than expected UK employment figures helping GBP/USD approach past week high of 1.5683. Holding nearby, the pair seems to be losing some of its upward potential according to the 4 hours chart, as 20 SMA partially losses the bullish slope and indicators turn flat in positive territory: some consolidation in between 1.5610 and mentioned 1.5685 price zone should be expected before another leg higher: a price acceleration above mentioned high should lead to a quick spike towards 1.5730 first, while once above this last, 1.5770 is next.A corrective movement could gather momentum if price losses the 1.5610 area, with 1.5550/60 price zone as next strong support to watch.




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EUR/NOK has formed a Channel Up pattern on the 1H chart. The pattern has 40% quality and 74% magnitude in the 162-bar period.

The pattern began on 6th of June when in the course of three hours the pair appreciated from 7.5795 to 7.6431; at the moment it is trading at the Bollinger band at 7.6882. Trading volume seems to be holding at the same level in the length of the pattern. Technical indicators on aggregate point at appreciation of the pair on all relevant charts. Long traders could focus on the 20-bar SMA/Bollinger band/recent high at 7.6917/7.7014, daily pivot (R1)/pattern’s resistance at 7.7203/17 and daily pivot (R2) at 7.7456.

74% of all pending orders on the pair are set to go short. This signals about the existence of significant resistance in upper levels. Short traders could focus on the daily pivot (PP) at 7.6761, daily pivot (S1) at 7.6509, 200-bar SMA/pattern’s support at 7.6247/07, daily pivot (S2) at 7.6067 and 20-day SMA at 7.5963.



NZD/JPY 1H Chart

Emerging Pattern: Channel Down

This pattern does somewhat resemble a double bottom formation, but we are still inclined to believe that this is more likely to be a nascent channel down, being that the second valley was staged at lower levels than the previous one. Moreover, traders’ sentiment and technical indicators are in accord and suggest the down-trend will persist.


GBP/CAD 1H Chart

Emerging Pattern: Channel Up

On an hourly chart of GBP/CAD we should rather focus our attention on the lower boundary of the channel that has been already tested on many occasions, while the upper boundary is not yet considered sufficiently reliable. Therefore we are more or less sure that the rally will be extended, but it will be hard to accurately estimate future price peaks.


EUR/CHF 1H Chart

Emerging Pattern: Channel Down

While situation in the previous two pairs is rather certain, EUR/CHF’s mid-term perspectives are clouded. At the time when the pattern and technicals suggest movement downwards, the bullish side among market participants is crowded and there is a good reason for that—the support at 1.2286 has not let the pair to descent lately, implying a double bottom being formed on the chart. Therefore price’s behaviour at the declining resistance line (1.2391) will be critical in defining future performance if it is to rise in the near term.




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GBPUSD: Remains On The Offensive.

GBPUSD - Our call for more upside offensive is underway as we look for GBP to take out the 1.5683 level and trigger further gains. This will pave the way for a run at the 1.5750 level followed by the 1.5800 level. Its daily RSI is bullish and pointing higher supporting this view. On the downside, the risk is for GBP to reverse its corrective recovery and return to the 1.5320 level, a tough call at its current price levels. Further down, support resides at the 1.5200 level and then the 1.5100 level. On the whole, GBP continues to retain its upside offensive.



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Dow Jones :
Resistance(daily close) : 14855.63, 15021.70, 15159.38 and 15404.28. Breaking of the latter would give 15643.13, 15845.63, 16022.80

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EUR/USD 1H chart 6/12/2013 9:51AM EDT



Bullish stance:
1) The EUR/USD has been making higher lows and highs this week after initially coming down to find support at 1.3175. Price has made a new high above 1.33.
2) The moving averages are mostly in bullish alignment, with price above an up sloping 200-hour SMA.
3) The RSI is still holding above 40, showing maintenance of the bullish momentum in this time-frame. It has not shown strong bullish momentum since last week, but its there, and there are no signs of bearish momentum.
61.8% retracement, ABC correction: As we near the 61.8% retracement level, we are also seeing the daily RSI tag 70. This is a sign there is bullish momentum in the daily time-frame, but it might be overbought in the lower time-frame. Considering this also looks like a completed abc correction, and arguably a gartley pattern, a throwback is probably imminent. The 1.31 level, near the 200-day SMA could be a target for reversion. This outlook requires first a break below the 1.3264, 6/12 low.
Next resistance: If the market accelerates, the upside risk then is toward the 1.35 handle, near the 78.6% retracement.

EUR/USD 1H chart 6/12/2013 9:55AM EDT




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EUR/USD 1H chart 6/13/2013 8:45AM EDT



Bullish channel: The EUR/USD has formed a rising channel this week since finding support at 1.3176. The 6/13 session saw further rise in the euro, as EUR/USD pushed to 1.3390 before retreating during the European session. As we get into the US session, we are once again at key support factors in this 1H time-frame.
Support factors: The 1.3304 level was a previous resistance pivot and can be anticipated as support. We are also testing the rising channel support. As far as momentum, you can see persistent bullish momentum with the 1H RSI holding above 40 while being able to tag 70. It is once again at 40.
Bullish outlook: Is the near-term corrective cycle over and will the bullish pattern continue in this rising channel? If it does, and push above 1.34, there are some resistance factors around the 1.35 handle.
Breakdown: A breakdown of the 1.33 handle will clear the channel support and open up the 1.3176 support pivot. With the market bullish in this time-frame, we should probably also monitor the 200-hour SMA as a possible factor of support.


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