Forex Strategies

EUR/USD 4H chart 5/16/2013 9:25AM EDT



Support: EUR/USD bounced off support as anticipated, off a couple of projected trendlines and the fact the 4H RSI was below 30. The oversold condition is now resolved and there was indeed some support pushing the pair up to 1.2918 during the 5/16 US session.

Trendline: The RSI in the 4H chart is no long oversold. Price is back above 1.29, this intra-day bullish attempt is being challenged by a falling trendline seen in the 4H chart and the 1H chart below.
Momentum: The 1H chart also shows that the RSI reading is at 60. If the momentum in this time-frame is to remain bearish, the RSI should hold under 60. Otherwise, a break above 60 reflects loss of bearish momentum, which would appropriately accompany a price break above the falling TL. Note the false break above 60 in the 1H RSI last time.

Breakout scenario: A break above the TL suggests a pullback toward the flat 200-SMA in the 4H chart because this moving average represents the “mean” price action since beginning of April.
However failure to break above the TL, and a subsequent break down below the current low of 1.2842 should continue the bearish outlook toward the 2013-low of 1.2744.

EUR/USD 1H chart 5/16/2013 9:28AM EDT





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NZD/JPY 4H chart 5/12/2013 9:15PM EDT



Ascending triangle support: NZD/JPY has been in an ascending triangle since the middle of April. You do see a slight bullish bias in the 4H chart since 1) it is an ASCENDING triangle, and 2) because price is still above the 200-SMA in the 4H chart, which is coincident with the ascending triangle support.

Scenarios: Continuation of the structure suggests the market can possibly bounce back to the 84.90 highs, or maybe some lower resistance pivot within the triangle. A break below 83.40 could be a sign of breakout and could open up the bottom of the ascending triangle, which is around the 61.8% retracement near the 81.00 handle.



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GBP/USD 4H chart 5/16/2013 8:35AM EDT



1.52 Support: The decline in GBP/USD has stalled this week after it cracked the support around the 1.52 handle. It has been consolidating with a spike down to 1.5172 and resistance up to 1.5271. The market has been in this 100-pip range for a couple of sessions now. But as we begin the 5/16 US session, GBP/USD appears to be testing the resistance and looking to establish a near-term bottom.

Breakout: A break above 1.5275 suggests a bit more bullish correction after setting up a near-term bottom.Perhaps we can anticipate a test of the previous resistance pivot at 1.5330.
However, if the breakout is immediately faded and the market falls below a local pivot around 1.5250, then this near-term bullish outlook would be neutralized. On the other hand a bounce off 1.5250 after a throwback reflects near-term bullish bias.

The 4H chart shows that the 1.52 handle as also where previous support pivots were. To the downside, below 1.5170, the next key support pivot will be around 1.5025, before opening up the 1.4830 2013-low.


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The EUR/USD trades in a 50 pips range, consolidating recent losses and with no signs of changing bias, despite better than expected economic data around Europe. Dollar sustained advance is being support by little movement and around stocks markets, and gold extending its slide and trading near $1370/oz. As for the 4 hours chart, technical readings maintain the negative tone, with momentum gaining bearish slope and RSI also heading south after barely correcting oversold readings. Sellers so far had been aligned in the 1.2880/90 area, strong midterm static resistance level no, while price holds above 1.2842, yesterday’s low: a break below this last should favor another run lower with a short term target around 1.2800, although with scope to test 1.2744 this year low.Steady gains above the 1.2890 level may see further upward corrections, with 1.2930, 20 SMA in the 4 hours chart as next resistance level to watch.



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GOLD accelerated lower in the last couple of days after a fall through the lower side of a trading channel connected from 1320. So we turned bearish on gold again as we want to go with the current sentiment. In fact, price fell well below the base channel support line yesterday and made a daily close beneath 1400 which is very important sign for a wave three of three sell-off. As such, we think that gold will move even deeper in sessions ahead, towards 1360/65 in the near-term and then even to 1320 level April lows.



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At the moment neither technical indicators nor traders’ sentiment are giving clear signals where to AUD/CAD is headed. However, the price’s action during the last 166 bars suggests that it has formed a channel down and therefore tends to decline more than to rise. Accordingly, our focus is on the nearest supports, namely 1.0026, 0.9999 and 0.9956, the latter level being the most likely point of contact with the lower boundary of the pattern.



NZD/JPY 1H Chart

Emerging Pattern: Ascending Triangle

Since May 2 and even before that the currency pair was making a considerable effort to break though the resistance at 84.79. However, the attacks were repelled, sending NZD/JPY lower. Still, the price is increasing bullish pressure on this level, posting higher lows after each test of 84.79 and thereby trading in an ascending triangle. On the other hand, market participants doubt pair’s ability to overcome the resistance—67% of them are bearish on it.



CAD/JPY 1H Chart

Emerging Pattern: Rectangle

For some time now CAD/JPY has been in an up-trend, but has recently encountered a formidable resistance area around 100.97, which prevents further advancement. According to the technical studies the price should recommence a recovery, although there are mixed sentiments among SWFX marketplace participants, 46% of them are bullish and 54% are bearish.



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Market Commentary

The Dollar Index (DX) tests initial projection of 84.16 after closing beyond previous resistance of 83.50 ranges to currently trade at 84.00. The benchmark equity index of the Dow Jones Industrials Average (DJIA) continued to make new highs despite stronger Greenback; it seems the correlation between DJIA Vs DX is getting lesser significant, wherein historic inverse correlation is not observed since last couple of weeks with both the indices appreciating.
The benchmark equity index of the Dow Jones Industrials Average (DJIA) continued appreciating to make new highs; the major trend is still intact till DJIA manages to trade above 14860 ranges.
Historic correlation between DX Vs DJIA suggests the long term trend is still Dollar bearish till the Dollar Index is not closing above 88.40 on monthly basis though medium term trend is bullish till it manages to close above 83.50 ranges on daily basis.

Sideways-Down	1.2970	1.2930	1.2850	1.2820
Up	103.20	102.60	101.90	101.70
Down	1.5330	1.5270	1.5170	1.5120
Up	0.9770	0.9710	0.9620	0.9580
Sideways-Up	134.90	133.90	130.10	129.40
Down	0.9000	0.9860	0.9730	0.9690

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The strong bearish momentum seen in EUR/USD this week, has put the pair under risk of massive selloff as price is approaching a key support level, the neckline of a H&S figure around 1.2750. Considering the fact that the year low is at 1.2744, and therefore stops below should be large, a break lower should be the kick start of another round of dollar demand against the Euro.*The figure height is of around 950 pips, which means the target comes at 1.1800!! However, don’t get too excited about it: price did not manage yet to break lower, and to anticipate a 950 pips straight fall seems way too boldly. Besides if that actually happens, it will take at least a couple of months to achieve the target.

However, a daily close below 1.2740 should put traders on alert, and even close to panic, and the rally will likely accelerate towards its immediate target of 1.2660, November 2012 monthly low. FED Minutes next week and the possibility or not of tapering QE, will have the final word on the matter. Sustained losses below 1.2660, will expose then 1.2430/70 area, where the pair presents several monthly highs and lows since October 2008.




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AUDUSD: Weakens, Eyes The 0.9700 level and Below.

AUDUSD - Having continued to weaken, the risk is for more decline to occur towards the 0.9700 level.

Further downside, the 0.9600 level comes in as the next downside followed by the 0.9500 level. Its daily RSI is bearish and pointing lower supporting this view. Conversely, AUDUSD will have to return above the 1.0114 level to halt its present downside and then turn attention to the 1.0200 level. Further out, resistance comes in at the 1.0300 followed by the 1.0357/84 levels. All in all, the pair remains biased to the downside medium term.


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USDJPY: 103.18
Short-Term Trend: uptrend

Outlook:
This uptrend remains unbelievably strong! Last week USD continued its advance and there was almost no hesitation at 102.45 Fibonacci level. Now, the next upside target is seen at 104.65, then our focus will be on 108.21 level. From a trading perspective thoug, a low-risk entry point (if you are not long already) will come only with a retreat twd the 100.00 level.

On the downside, only a move below 98.50 and then below 97.00 will indicate that a more important top has finally been found...

Strategy: Longs favored at 100.20. Stop=98.50. Target=108.00



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