Joined: March 23 2006
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Topic: Forex 618’s Daily Euro and GBP trades Posted: March 23 2006 at 06:22
Daily Currency report for Thursday March 23 2006
This is only a guide. Please refer to our specific entry signals for exact entries and stops.
EUR/USD
Medium Term Trend: The Euro has dropped below first support at 1.2080, but its path downwards is hesitant to say the least. Now we have support at 1.2030 and 1.1990, the latter being just below our trend reversal level at 1.2000. Although the Euro has dropped a little further than we would like, the upward trend remains intact as long as we hold above here.Traders should continue to buy dips whilst above 1.1990, stops just below. The UPtrend should resume very soon and, eventually, although probably not this week, the Euro should break above 1.2200 and rally to 1.2300 and above.
Trend Phase:Direction UP. Probability FAIR
Trend Reversal Level: 1.2000
Strategy today:Buy at 1.2050, stops under 1.1980.
Chart: Euro slipping under first support, but still bullish, trying to base at 1.2050 and should be contained by 1.2000
GBP/USD
Medium Term Trend:Sterling has just turned bearish again in a very mixed market which is lacking medium term direction. For today, we expect dips to be contained by support above 1.7400, but cannot rule out a brief dip to 1.7350-70, where the right side of a potential inverse "Head and Shoulders" pattern is beckoning. Until we break above 1.7600 and close above there on a daily basis, Sterling's fortunes will be mixed and trading will probably continue to be subject to large swings and spikes within the range. Although the short term swings are not easy to predict at the moment, the medium term UPWARD trend should resume in coming days.
Trend Phase:Direction MIXED. Probability POOR
Trend Reversal Level: N/A
Strategy today:Buy dips to 1.7450/00 on signs of basing, stops well below 1.7380. Eventual target is 1.7600 to cover or to add to longs on a daily close above.
Chart: Left side and head of a daily inverse "Head and Shoulders" pattern have formed - prices may just dip to 1.7370/50 this week to form the right shoulder - if 1.7420 does not hold.
Dollar Index
Medium Term Trend:No changes in a quiet week for the dollar so far. Bouncing towards 90.0 as expected, but still a little bit to go perhaps. Any rallies are likely to be capped at around 90.00, and no higher than 90.3. We expect the Dollar to drop to the 88.00 region in coming days – perhaps quite suddenly, but we must hold below 90.00 this week to ensure that we do not enter another prolonged ranging market.
Trend Phase:Direction DOWN. Probability FAIR
Trend Reversal Level: 90.0
Strategy today:Sell rallies towards Fibonacci retracement levels at 89.70 and 90.00, stops well above 90.20. Cover shorts near 88.00 and look for chances to re-sell on a bounce.
Chart: The Dollar has rallied back to 90.00 as expected. We expect this level (90.60 MAX) to cap the rally and send the Dollar lower. This should allow Euro and GBP to resume their rise very soon.
Joined: March 23 2006
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Posts: 305
Posted: March 24 2006 at 01:54
Daily Currency report for Friday March 24 2006
This is only a guide. Please refer to our specific entry signals for exact entries and stops.
EUR/USD
Medium Term Trend: Dipping just below our lowest support level at 1.1990 after a sudden move lower late in the day, the Euro is now oversold and directionless. We continue to feel that the Euro should base this week, but now must allow for dips as low as 1.1930 before rallying. A strong rally today could take the Euro back to 1.2050/1.2100, perhaps forming a bullish engulfing daily candle and a weekly spike low. If we do not get back above at least 1.2040 today, we are in danger of more dips, perhaps even back towards 1.1830, but this is not our preferred scenario.
Trend Phase:Direction MIXED. Probability POOR
Trend Reversal Level: 1.2050
Strategy today:Buy at 1.1950, stops under 1.1900, target 1.2050 and then 1.2200.
Chart: What a mess as we slip back into the large range which has dominated for many months. See our special report on the Euro long term chart later today...
GBP/USD
Medium Term Trend:Sterling has slipped as much as the Euro and now tests the right hand shoulder zone of the inverse "head and shoulders" pattern as we expected it might. Now support lies between 1.7350 and 1.7330. This is formed by the 78.6% retracement level of last weeks rally, and the technical level formed by the aforementioned pattern. If we can hold above here, expect a strong rally today, but if this level gives way, we could be in for another drop towards 1.7250 again - right back where we started 2 weeks ago. Frustrating ranging within a large zone and no end in sight just yet.
Trend Phase:Direction MIXED. Probability POOR
Trend Reversal Level: 1.7600
Strategy today:Buy dips to 1.7350/20, stops below 1.7300. Target 1.7600.
Chart: Left side and head of a daily inverse "Head and Shoulders" pattern have formed - Support now at 1.7330 should hold.
Dollar Index
Medium Term Trend:The Dollar has done well against struggling European Currencies and is now testing the top of the retracement range near 90.50. We expect this level to cap further rallies (90.7 MAX) before downward pressure forces this rally to reverse.
Trend Phase:Direction DOWN. Probability FAIR
Trend Reversal Level: 90.7
Strategy today:Sell rallies towards 90.7. Cover shorts near 88.00 and look for chances to re-sell on a bounce.
Chart: The Dollar has rallied back to 90.5 - a little more than expected. We expect this level (90.60 MAX) to cap the rally and send the Dollar lower. This should allow Euro and GBP to resume their rise very soon.
Medium Term Trend: Powering up from support at 1.1950, the Euro has managed to break above the recent downward trend line, form a daily reversal pattern on Friday, AND close above the 50 day moving average again. All in all, quite bullish, but we are not out of the woods yet. Remembering that we have important market moving news this week, the Euro needs to close above 1.2100, and hopefully, 1.2200 in order to turn the picture truly bullish. Until then, allow for more fluttering around in current ranges - but no lower the 1.1950.
Trend Phase:Direction UP. Probability FAIR
Trend Reversal Level: 1.1950
Strategy today:Buy dips above 1.2000, stops under 1.1950, target 1.2100 and then 1.2200.
Chart: Breaking above the trend-line and 50 day moving average. We are still really stuck in the range, but momentum has turned slightly bullish again.
GBP/USD
Medium Term Trend:Much the same as the Euro, as the Dollar reversed its gains against a whole basket of currencies on Friday. Sterling dropped to 1.7307 before rallying back above 1.7400 on Friday, forming a reversal pattern on daily charts and strongly breaking the recent downward trend line. The Pound remains below its key moving averages and is not yet bullish, but support at 1.7300 was key and has given a clear "bounce" The still-forming inverse "Head and Shoulders" pattern should continue to develop and adds a bullish angle to the analysis. As long as 1.7300 holds this week, Sterling should try for 1.7600 again, and perhaps break higher.
Trend Phase:Direction MIXED. Probability POOR
Trend Reversal Level: 1.7300
Strategy today:Buy dips to 1.7420, stops below 1.7300. Target 1.7600.
Chart: Left side and head of a daily inverse "Head and Shoulders" pattern have formed - Support now at 1.7330 should hold.
Dollar Index
Medium Term Trend:As we wrote last week: We expect this level to cap further rallies (90.7 MAX) before downward pressure forces this rally to reverse. This played out perfectly, as the Dollar touched 90.62 before turning sharply lower on Friday. Hopefully, this level will hold this week, forming a medium term top, which will push the Dollar lower towards 89.00 and lower. Allow for a bit more ranging activity ahead of the FOMC on Tuesday.
Trend Phase:Direction DOWN. Probability GOOD
Trend Reversal Level: 90.7
Strategy today:No change. Sell rallies towards 90.7. Cover shorts near 88.00 and look for chances to re-sell on a bounce.
Chart: The Dollar has reversed at 90.62 as we expected. It should drop to 89.00 in coming days, before breaking lower.
Medium Term Trend: Yesterday was a quiet day for the Euro - neatly consolidating Friday's gains, but not adding any more. Momentum has only just turned bullish, but there is a lot more work to be done before we can start to think about a 1.2200 break. Until then, allow for more fluttering around in current ranges - but no lower the 1.1950 - a break below here will set the timing back another week or two and send the price below 1.1900.
Trend Phase:Direction UP. Probability FAIR
Trend Reversal Level: 1.1950
Strategy today:Buy dips above 1.1990, stops under 1.1950, target 1.2100 and then 1.2200.
Chart: The Euro did well on Friday, but it is now getting stuck in the mid-range doldrums at 1.2000 again, an all-too-familiar scene. Perhaps the FOMC today will generate a Nor'easter to "fill the sails"
GBP/USD
Medium Term Trend:Holding up better than the Euro, and adding more gains yesterday. The Pound should hold above roughly 1.7380 - 1.7400 today in order to keep things going higher. If we can keep on nudging upwards, we should see a retest of 1.7600 sooner rather than later, with a break above there setting a very bullish scene and probably sparking a rally towards 1.7900 in fairly quick time. Hopefully, 1.7300 is a medium term technical bottom which will hold, but any breach of this level will probably send Sterling back down to 1.7100 - not our preferred scenario.
Trend Phase:Direction MIXED. Probability POOR
Trend Reversal Level: 1.7300
Strategy today:Buy dips to 1.7420/1.7380, stops below 1.7300. Target 1.7600.
Chart: If first support levels near 1.7400 can hold today, the Pound should be able to retest 1.7600 this week or early next.
Dollar Index
Medium Term Trend:Not a lot to add as the Dollar bumps around in recent ranges and lacks any clear direction. 90.70 - 91.10 should continue to cap rallies and eventually send the Dollar lower towards 88.00. A break above 91.10 will force us to reconsider.
Trend Phase:Direction DOWN. Probability GOOD
Trend Reversal Level: 91.1
Strategy today:No change. Sell rallies towards 90.7, stops above 91.1. Cover shorts near 88.00 and look for chances to re-sell on a bounce.
Chart: Like watching paint dry, as we have been in the same small range for two months.
Medium Term Trend: All the way up and then...back down again. It certainly has been a challenging first quarter for traders as, despite lots of ups and downs, currencies have gone nowhere. The Euro remains somewhat bullish, but yesterday's price action suggests that we need to work at the lower levels of the range for a few more days still. We are just holding support at 1.2000, but there is no indication that this level will hold yet. Allow for dips to 1.1950 and perhaps even 1.1900 in what is likely to be a difficult remainder of the week. Aggressive traders could try tiny longs at 1.2000 with tight stops, but we prefer to wait for a deeper correction.
Trend Phase:Direction MIXED. Probability POOR
Trend Reversal Level: Ranged
Strategy today:Perhaps try tiny longs at 1.2000, stops below 1.1980, or re-buy at 1.1900 - 1.1950, stops under 1.1850.
Chart: More ranging - this time with a downside bias after a clear "spike high" candle yesterday
GBP/USD
Medium Term Trend:Trying to break free, but not quite making it. Sterling rallied back to its 50 day moving average and near the top of the daily range (which is at 1.7600), but events have forced it to do another U-turn. Support at 1.7420 is not likely to hold and Cable should plunge lower towards 1.7300 again before trying to base. Once again, a difficult week to forecast, but aggressive traders could sell at current levels, looking to exit and buy near 1.7300/50. Eventually, though probably not this week, Sterling should try to re-approach 1.7600 and break higher.
Trend Phase:Direction MIXED. Probability POOR
Trend Reversal Level: 1.7300
Strategy today:Perhaps try tiny shorts at 1.7420/50. Exit and buy near 1.7300/1.74000, stops below 1.7280. Target 1.7600.
Chart: Can 1.7380 hold the decline, or do we need to visit 1.7300 again B4 UP?
Dollar Index
Medium Term Trend:Not a lot to add as the Dollar bumps around in recent ranges and lacks any clear direction. 90.70 - 91.10 should continue to cap rallies and eventually send the Dollar lower towards 88.00. A break above 91.10 will force us to reconsider.
Trend Phase:Direction MIXED. Probability POOR
Trend Reversal Level: 91.1
Strategy today:No change. Sell rallies towards 90.7, stops above 91.1. Cover shorts near 88.00 and look for chances to re-sell on a bounce.
Joined: March 23 2006
Online Status: Offline
Posts: 305
Posted: March 30 2006 at 00:48
Daily Currency report for Thursday March 30 2006
This is only a guide. Please refer to our specific entry signals for exact entries and stops.
EUR/USD
Medium Term Trend: And ...back up again. The recent cavorting around the 1.2000 region suggests that the Euro is trying to find direction. The fact that tomorrow is the end of the 1st quarter 2006, and the fact that the market has been particularly range-bound, suggests that today and tomorrow might be key days. Allow for a little more flip-flopping near 1.2000, followed by a very decisive break higher later today or tomorrow. Prices should hold well above 1.1980 now, and a break above 1.2200 will get things going much faster towards 1.2350.
Trend Phase:Direction UP. Probability GOOD
Trend Reversal Level: 1.1980
Strategy today:Buy at 1.2050/20, stops under 1.1980. Add to longs on a break above 1.2200 for 1.2350
Chart:The Euro has recovered well and things are looking a lot more bullish. Will the last days of the first quarter produce some more "gas"?
GBP/USD
Medium Term Trend:Trying hard to keep up but not doing quite as well. Sterling rallied off the 1.7320 low yesterday as we thought it would, but has some way to go before it turns bullish again, and needs to overcome several new resistance levels in the 1.7400's. We still feel that this one will eventually break the curved resistance band between 1.7500 and 1.7600 (traced out by rally peaks and the 50 day SMA - see chart) though probably not this week. Support at 1.7320 is now key. Although not favoured, a break below will expose 1.7200, and perhaps even 1.7100.
Trend Phase:Direction MIXED. Probability POOR
Trend Reversal Level: 1.7300
Strategy today:Buy dips above 1.7320.
Chart: Curved resistance band formed by 50 day SMA and rally peaks - this is the major obstacle for Cable in coming days.
Dollar Index
Medium Term Trend:We have been ranged between 88.0 and 91.0 almost all of the time since the start of this year. Not terribly inspiring for range traders and a waste of time for trend traders. Will the end of the first quarter 2006 bring any relief? Same story as yesterday - 90.70 - 91.10 should continue to cap rallies and eventually send the Dollar lower towards 88.00. A break above 91.10 will force us to reconsider.
Trend Phase:Direction MIXED. Probability POOR
Trend Reversal Level: 91.1
Strategy today:No change. Sell rallies towards 90.7, stops above 91.1. Cover shorts near 88.00 and look for chances to re-sell on a bounce.
Joined: March 23 2006
Online Status: Offline
Posts: 305
Posted: March 31 2006 at 00:31
Daily Currency report for Friday March 31 2006
This is only a guide. Please refer to our specific entry signals for exact entries and stops.
EUR/USD
Medium Term Trend: The Euro continues to perform well, and should do so again today. Dips may be quite shallow, so buyers will have to buy at slightly higher prices than they might like, however any dips to the 1.2100 region are seen as good chances to enter longs for another attempt at 1.2200 today. A break above there should see 1.2350 fairly quickly, and probably a little higher at 1.2400 for good measure. If we finish off today/this week/this quarter strongly, we have probably begun the next leg of the Euro's long term rally.
Trend Phase:Direction UP. Probability GOOD
Trend Reversal Level: 1.1980
Strategy today:Buy at 1.2100/1.2080, stops under 1.2050. Add to longs on a break above 1.2200 for 1.2350
Chart: Certainly bullish and 1.2100 (1.2050 MAX) should contain any dips.
GBP/USD
Medium Term Trend:Still lagging behind the Euro, but yesterday's "bullish engulfing candle" should add some impetus to Cable bulls. We still need to break above the "curved" resistance band between 1.7500 and 1.7600, but hopefully a final push today will enable the Pound to burst higher. If not, expect more dreary ranging, and the possibility of slipping below 1.7300.
Trend Phase:Direction MIXED. Probability POOR
Trend Reversal Level: 1.7300
Strategy today:Buy dips above 1.7320.
Chart: Curved resistance band formed by 50 day SMA and rally peaks - this is the major obstacle for Cable in coming days.
Dollar Index
Medium Term Trend:Slightly lower, but no material change. We have been ranged between 88.0 and 91.0 almost all of the time since the start of this year. Not terribly inspiring for range traders and a waste of time for trend traders. Will the end of the first quarter 2006 bring any relief? Same story as yesterday - 90.70 - 91.10 should continue to cap rallies and eventually send the Dollar lower towards 88.00. A break above 91.10 will force us to reconsider.
Trend Phase:Direction MIXED. Probability POOR
Trend Reversal Level: 91.1
Strategy today:No change. Sell rallies towards 90.7, stops above 91.1. Cover shorts near 88.00 and look for chances to re-sell on a bounce.
Medium Term Trend: Collapsing back towards important trend-line and medium term support at 1.2000, and no sign of a bounce yet. Price should try to hold above here today and this whole week, but as the market is ranged and not trending, we may have to wait a little longer for a break above 1.2200 and 1.2300. The medium term trend upwards remains intact. Only below 1.2000 - not our preferred view - will mean that the Euro has to spend a lot longer in the 1.1600 - 1.2200 range in the second quarter of this year.
Trend Phase:Direction UP. Probability FAIR
Trend Reversal Level: 1.1980
Strategy today:Buy at 1.2020, stops under 1.1980. Add to longs on a break above 1.2200 for 1.2350
Chart: Support near 1.2000 should contain this dip.
GBP/USD
Medium Term Trend:The Pound has just broken below key support at 1.7320, meaning we may now test any of the lower support areas below at 1.7275, 1.7230 or 1.7130. All in all, not a very inspiring market with low probabilities and a tendency to reverse suddenly with large spikes. Until we see a meaningful low in place or a break out from the range which has persisted since September last year, direction will remain sideways. This week should see much more of the same sort of ranging between 1.7100 and 1.7600.
Trend Phase:Direction MIXED. Probability POOR
Trend Reversal Level: N/A
Strategy today:Try tiny longs at 1.7300/1.7250 ONLY ON SIGNS OF BASING. Place stops under 1.7230 and re-buy at 1.7150 if stopped out, stops under 1.7100
Chart: More sideways work as we move steadily across the page.
Dollar Index
Medium Term Trend:Nothing to add at all. We have been ranged between 88.0 and 91.0 almost all of the time since the start of this year. Not terribly inspiring for range traders and a waste of time for trend traders. 90.70 - 91.10 should continue to cap rallies and eventually send the Dollar lower towards 88.00. A break above 91.10 will force us to reconsider.
Trend Phase:Direction MIXED. Probability POOR
Trend Reversal Level: 91.1
Strategy today:No change. Sell rallies towards 90.7, stops above 91.1. Cover shorts near 88.00 and look for chances to re-sell on a bounce.
Medium Term Trend: The Euro bounced off the 1.2020 area as expected, forming a "spike low" daily candle in the process and maintaining the bullish momentum of the past few days. However, the market remains trapped in the broad range of the past three months and is still vulnerable to sudden downside tests within the range. Today's price is just probing important resistance near the 50 week SMA, and a daily close above here will add bullish momentum. Until then, allow for dips to 1.2080, and even 1.2000. Only below 1.2000 - not our preferred view - will mean that the Euro has to spend a lot longer in the 1.1600 - 1.2200 range in the second quarter of this year.
Trend Phase:Direction UP. Probability FAIR
Trend Reversal Level: 1.1980
Strategy today:Buy at 1.2080, adding to 1.2020, stops under 1.1980. Add to longs on a break above 1.2200 for 1.2350
Chart: A respectable bounce and spike low off the 1.2020 area should add some upwards fuel.
GBP/USD
Medium Term Trend:A promising rebound off 1.7250 and a chart pattern of the sort which will inspire reversal players. This "should" inspire more buyers and another positive day for the Pound today, but we remind traders that this is still a poor probability market overall, and sudden spikes in either direction are the norm at the moment. 1.7250 should now contain any dips and levels near 1.7310 - 1.7350 are good opportunities to try small longs.
Trend Phase:Direction MIXED. Probability POOR
Trend Reversal Level: N/A
Strategy today:Try tiny longs at 1.7350/1.7310 ONLY ON SIGNS OF BASING. Place stops under 1.7230 and re-buy at 1.7150 if stopped out, stops under 1.7100
Chart: Another promising reversal pattern yesterday, but so many recent false starts will keep the market nervous.
Dollar Index
Medium Term Trend:A small "spike high" yesterday near resistance at 90.50 should spark yet another downside probe today. However, we have been ranged between 88.0 and 91.0 almost all of the time since the start of this year, and until we see a close beneath 88.00, expect more of the same. Not terribly inspiring for range traders and a waste of time for trend traders. 90.70 - 91.10 should continue to cap rallies and eventually send the Dollar lower towards 88.00. A break above 91.10 will force us to reconsider.
Trend Phase:Direction MIXED. Probability POOR
Trend Reversal Level: 91.1
Strategy today:No change. Sell at 89.7, adding to rallies towards 90.7, stops above 91.1. Cover shorts near 88.00 and look for chances to re-sell on a bounce.
Chart: Slightly more encouraging after yesterday's spike high.
Medium Term Trend: The Euro has broken above the first key resistance level at 1.2200 and now faces 1.2350 and 1.2400, where things begin to get really interesting. In the bigger picture, we need a daily close above 1.2400 to turn things truly bullish, and to break the deadlock which has been in place since the beginning of the year. An attempt at this break should take place very soon in the coming days. Until then, allow for very shallow dips to 1.2200 - 1.2180, and no lower than 1.2100. As and when we do break above 1.2400, prices could move very swiftly higher, leaving little time to buy at very high levels.
Trend Phase:Direction UP. Probability GOOD
Trend Reversal Level: 1.2000
Strategy today:Buy at 1.2200 - 1.2180, stops under 1.2120. Target 1.2350 - 1.2400. Try tiny shorts at 1.2380 - 1.2400, target 1.2300.
Chart: The Euro has surged above its first resistance and is eyeing the bull/bear divide at 1.2350/1.2400.
GBP/USD
Medium Term Trend:Rallying in tandem with the Euro, but still below 1.7600. However, we should break above here very soon, if not today, then later this week. This should spark a surge of buying as large numbers of stops are triggered and medium term players realize that they may have to adjust their views. For today expect repeated knocking on the 1.7600/50 door, followed by a break higher sooner rather than later. All dips to 1.7480 are seen as excellent chances to buy Sterling for a rally to 1.7900.
Trend Phase:Direction UP. Probability FAIR
Trend Reversal Level: 1.7480
Strategy today:It may be difficult in this strong rally, but any dips to 1.7500 are good buying opportunities.
Chart: "cautiously bullish" as we rally hard but remain inside the recent range.
Dollar Index
Medium Term Trend:Dropping below support at 88.8, and heading lower. We remind that the Dollar must close below 88.0 before a new downtrend can be announced. Until then, whilst momentum is bearish and we have closed below the 50 day SMA, we will allow for further ranging and flip-flopping.
Trend Phase:Direction DOWN. Probability FAIR
Trend Reversal Level: 90.8
Strategy today:Sell rallies towards 90.0, stops above 90.8. Add to longs on a daily close below 88.00..
Chart: Just turning bearish and heading towards key support at 88.00.
Medium Term Trend: A quiet day for the Euro yesterday as the market awaits interest rates and jobs data today and tomorrow. The gains of the past few days have consolidated rather well at the 1.2280 level, with 1.2350 and 1.2400 in sight. In the bigger picture, we need a daily close above 1.2400 to turn things truly bullish, and to break the deadlock which has been in place since the beginning of the year. An attempt at this break should take place very soon in the coming days. Until then, allow for very shallow dips to 1.2200 - 1.2180, and no lower than 1.2100. As and when we do break above 1.2400, prices could move very swiftly higher, leaving little time to buy at very high levels.
Trend Phase:Direction UP. Probability GOOD
Trend Reversal Level: 1.2000
Strategy today:Buy at 1.2200 - 1.2180, stops under 1.2120. Target 1.2350 - 1.2400. Try tiny shorts at 1.2380 - 1.2400, target 1.2300.
Chart: Holding onto gains, but may dip to support later today or tomorrow.
GBP/USD
Medium Term Trend:Consolidating just under 1.7600 as expected, and will probably do so again most of today and perhaps even most of tomorrow, giving traders chances to buy on dips. However, we should break above here very soon, if not today, then later this week. This should spark a surge of buying as large numbers of stops are triggered and medium term players realize that they may have to adjust their views. First target is 1.7680 and then 1.7800/1.7900 next week.
Trend Phase:Direction UP. Probability FAIR
Trend Reversal Level: 1.7480
Strategy today:Buy at 1.7500/1.7480, stops under 1.7460. Re-buy at 1.7440/1.7400, stops under 1.7380. Target 1.7680 and then 1.7800.
Chart: Just dipping to first support, but generally consolidating quite neatly as traders get used to the fact that we may break higher.
Dollar Index
Medium Term Trend:Nothing to add since yesterday, after another tiny move lower. We remind that the Dollar must close below 88.0 before a new downtrend can be announced. Until then, whilst momentum is bearish and we have closed below the 50 day SMA, we will allow for further ranging and flip-flopping.
Trend Phase:Direction DOWN. Probability FAIR
Trend Reversal Level: 90.8
Strategy today:Sell rallies towards 90.0, stops above 90.8. Add to longs on a daily close below 88.00..
Chart: Just turning bearish and heading towards key support at 88.00.
Medium Term Trend: It's all about jobs again today, as the Euro consolidates at first support at 1.2180, after failing to breach the 1.2320 level yesterday. The good news is that the overbought situation has eased considerably, giving the market chance to gather more strength. As there are no clear signs of basing at this level yet, there is a risk of further dips towards 1.2150 and no lower than 1.2100. This morning will probably be quite and the market fairly thin as players jostle for position ahead of the NFP later on. All dips to 1.2150, and certainly 1.2100 are seen as excellent opportunities to buy Euros for another attempt at breaking 1.2320 - maybe not today, but probably early next week.
Trend Phase:Direction UP. Probability GOOD
Trend Reversal Level: 1.2000
Strategy today:Buy at 1.2180 - 1.2150, stops under 1.2130, re-buying at 1.2100. Target 1.2320, and eventually 1.2400.
Chart: Holding onto gains, but may dip to support later today or tomorrow.
GBP/USD
Medium Term Trend:After two days of ranging between 1.7500 and 1.7600, the Pound has managed to hold above support. It should try to do so again today, slowly making its way back towards 1.7600, and hopefully a break above there late in the day. Below 1.7480 and we may see a sudden drop back toward 1.7430 - 1.7400, but if this last outpost holds out, the bullish scenario remains intact. Below 1.7400 - not our expectation - sees a return to range trading and another boring period ahead. The Pound will probably move in tandem with the Euro today and be fairly directionless until the Jobs numbers are released.
Trend Phase:Direction UP. Probability FAIR
Trend Reversal Level: 1.7480
Strategy today:Strategy is unchanged - Buy at 1.7500/1.7480, stops under 1.7460. Re-buy at 1.7430/1.7400, stops under 1.7380. Target 1.7680 and then 1.7800.
Chart: Just dipping to first support, but generally consolidating quite neatly as traders get used to the fact that we may break higher.
Dollar Index
Medium Term Trend:Momentum is just beginning to tip toward the downside, but nothing explosive or very interesting. This means we remain stuck between a rock and a hard place and are looking for direction. Perhaps the Non Farm Payrolls numbers will provide it? We remind that the Dollar must close below 88.0 before a new downtrend can be announced. Until then, whilst momentum is bearish and we have closed below the 50 day SMA, we will allow for further ranging and flip-flopping.
Trend Phase:Direction DOWN. Probability FAIR
Trend Reversal Level: 90.8
Strategy today:Sell rallies towards 90.0, stops above 90.8. Add to longs on a daily close below 88.00..
Chart: Just turning bearish and heading towards key support at 88.00.
Medium Term Trend: The Euro collapsed to very key support at 1.2100 on the back of strong US data and comments by the ECB last week. This suggests we may have to spend a little more time under 1.2350 - perhaps this whole week. In the meantime, prices should try to base at 1.2100, with a slow crawl back up to the top from here over the next few days. Now that we are at the the lower portion of the range, the chance of a further drop to 1.2000, or even 1.1950 cannot be ruled out. Bear in mind that all dips whilst above 1.1950 - 1.2000 are still seen as a good opportunity to buy Euros for a rally in this quarter which should eventually take the Euro much higher. However, below 1.1950 and we will have to adjust our medium term view to allow for a lot more work at lower levels.
Trend Phase:Direction UP. Probability FAIR
Trend Reversal Level: 1.2000
Strategy today:Buy at 1.2100, stops under 1.2070, re-buying at 1.2000/50. Target 1.2220, and eventually 1.2400.
Chart: Another sudden drop - the third in the rally so far. This looks a little like the 2004 rally, but will it keep going?
GBP/USD
Medium Term Trend:Following the Euro lower and giving back a fair chunk of last weeks gains. As we have written so often recently, the probabilities for trading the Pound are not great at the moment, and until we break above 1.7600 or below 1.7250 things are not going to change. We are now below the 50 day SMA again and roughly in the range centre, so there are no clues about the next move. We will allow for more random flip flopping between the two levels this week, with an upside bias. Key support today is at 1.7400, and if we can hold this level and rally meaningfully above there, the chances of another upside attack increase.
Trend Phase:Direction SIDEWAYS. Probability POOR
Trend Reversal Level: N/A
Strategy today:Try tiny longs at 1.7400, stops under 1.7370, re-buying at 1.7300/1.7250. Target 1.7600 and then (if we get a break higher) 1.7800.
Chart: More ranging and poor risk/reward.
Dollar Index
Medium Term Trend:Another up-tick, but no meaningful change to the situation. Momentum is just beginning to tip toward the downside, but nothing explosive or very interesting. This means we remain stuck between a rock and a hard place and are looking for direction. Perhaps the Non Farm Payrolls numbers will provide it? We remind that the Dollar must close below 88.0 before a new downtrend can be announced. Until then, whilst momentum is bearish and we have closed below the 50 day SMA, we will allow for further ranging and flip-flopping.
Trend Phase:Direction DOWN. Probability FAIR
Trend Reversal Level: 90.8
Strategy today:Sell rallies towards 90.0, stops above 90.8. Add to longs on a daily close below 88.00..
Chart: Just turning bearish and heading towards key support at 88.00.
Medium Term Trend: The Euro is trying to base against 1.2100 after an unusually quiet day yesterday, but there is still no clear bottom in place. If we can push above 1.2130, and more importantly, 1.2180 today, the risk of more downside attacks becomes smaller. Until then, the chance of a further drop to 1.2000/50, or even 1.1950 cannot be ruled out. Bear in mind that all dips whilst above 1.1950 - 1.2000 are still seen as a good opportunity to buy Euros for a rally in this quarter which should eventually take the Euro much higher. However, below 1.1950 and we will have to adjust our medium term view to allow for a lot more work at lower levels.
Trend Phase:Direction UP. Probability FAIR
Trend Reversal Level: 1.2000
Strategy today:Buy at 1.2100, stops under 1.2070, re-buying at 1.2000/50. Target 1.2220, and eventually 1.2400.
Chart: Trying to base, but in no rush to reverse direction yet.
GBP/USD
Medium Term Trend:Slap bang in the middle of the range after going nowhere slowly for the past two months. Today's price action looks a little more hopeful for a rally, but until we break above 1.7600 it is all just noise. Key support today is at 1.7380, and if we can hold this level and rally meaningfully above there, the chances of another upside attack increase. Above 1.7480 should add some impetus for another attempt to break out of the top of the range at 1.7600.
Trend Phase:Direction SIDEWAYS. Probability POOR
Trend Reversal Level: N/A
Strategy today:Try tiny longs at 1.7400, stops under 1.7370, re-buying at 1.7300/1.7250. Target 1.7600 and then (if we get a break higher) 1.7800.
Chart: More ranging and poor risk/reward.
Dollar Index
Medium Term Trend:Another quiet day yesterday, with the Dollar just below its 50 day moving average and still making "lower highs" each time it rallies. Momentum is still slightly bearish and trying to increase in strength. The longer we remain trapped in this very tight and dull range, the more vigorous the breakout will be when it happens. We feel that this will be soon.
Trend Phase:Direction DOWN. Probability FAIR
Trend Reversal Level: 90.8
Strategy today:No change. Sell rallies towards 90.0, stops above 90.8. Add to longs on a daily close below 88.00.
Chart: Making "lower highs" and "lower lows" but at a snail's pace.
We have made our weekly target and are breaking for Easter until Monday 17th April
Medium Term Trend: Still a very murky technical picture and no clear direction has emerged after two days of trying to rally off 1.2080. This means no real change - if we can push above 1.2180 today, the risk of more downside attacks becomes smaller. Until then, the chance of a further drop to 1.2000/50, or even 1.1950 cannot be ruled out. Bear in mind that all dips whilst above 1.1950 - 1.2000 are still seen as a good opportunity to buy Euros for a rally in this quarter which should eventually take the Euro much higher. However, below 1.1950 and we will have to adjust our medium term view to allow for a lot more work at lower levels.
Trend Phase:Direction UP. Probability FAIR
Trend Reversal Level: 1.2000
Strategy today:No change -Buy at 1.2100, stops under 1.2070, re-buying at 1.2000/50. Target 1.2220, and eventually 1.2400.
Chart: Trying to rally off 1.2080, but not making much progress, leaving opportunity for more downside attacks.
GBP/USD
Medium Term Trend:One of the most dreary periods in the Forex market for several years means that the market has no direction. Today's price action looks a little more hopeful for a rally, but until we break above 1.7600 it is all just noise. Key support today is at 1.7380, and if we can hold this level and rally meaningfully above there, the chances of another upside attack increase. Above 1.7480 should add some impetus for another attempt to break out of the top of the range at 1.7600.
Trend Phase:Direction SIDEWAYS. Probability POOR
Trend Reversal Level: N/A
Strategy today:No change here either -Try tiny longs at 1.7400, stops under 1.7370, re-buying at 1.7300/1.7250. Target 1.7600 and then (if we get a break higher) 1.7800.
Medium Term Trend: A very mixed day yesterday in thin pre-Easter markets saw the Euro rally and then plunge, ending up going....well, nowhere. Technically, yesterdays price action gives argument for both directions today, and makes picking tops or bottoms difficult. Generally, the bigger picture has not changed and all dips whilst above 1.1950 - 1.2000 are still seen as a good opportunity to buy Euros for a rally in this quarter which should eventually take the Euro much higher. Below 1.1950 and we will have to adjust our medium term view to allow for a lot more work at lower levels. For today, expect more volatile moves as many traders close the books for the Holiday in Europe and the US and markets get thinner - probably holding above 1.2000, and maybe even above 1.2070, yesterday's low.
Trend Phase:Direction UP. Probability FAIR
Trend Reversal Level: 1.2000
Strategy today:Buy at 1.2100, stops under 1.2060, re-buying at 1.2000/50. Target 1.2220, and eventually 1.2400.
Chart: A bit of a mess as we form a bearish "outside" day but with a "spike low" attached. Best to stay out until next week - or be prepared for more tricky trading.
GBP/USD
Medium Term Trend:The Pound spiked up to the 1.7600 level before dropping back down again in response to US data. The question now is, can it continue the rally? We are near the top of the range and there is no evidence that it is yet to breakout, so probabilities for buying are not that great. Yesterday's daily (almost) Doji candle shows just how uncertain the market is right now, and thin Easter markets will not help. The good news is that we seem to have formed an interim base at 1.7400, which should hold any downside attacks. Momentum is just about bullish and prices should try to break above 1.7600, if not this week, then next. Until then expect more volatile and random price action underneath.
Trend Phase:Direction SIDEWAYS. Probability POOR
Trend Reversal Level: N/A
Strategy today:Try tiny longs at 1.7500, stops under 1.7450, re-buying at 1.7400, stops under 1.7350. Target 1.7600 and then (if we get a break higher) 1.7800.
Chart: Forming an interim base at 1.7400 has helped Cable, but we STILL need to break above 1.7600 to get things moving higher, faster.
Dollar Index
Medium Term Trend:Consolidating just under the 50 day moving average and giving up no ground on either side. It seems as if we may have made another interim top at 89.80, which means another "lower high" If this level can hold, it should trigger another downside foray towards 88.00 in the coming days. Only once we break below 88.00 will we see some serious stop losses triggered and a shift in market sentiment. Until then, play the range by selling rallies and covering near the lows.
Trend Phase:Direction DOWN. Probability FAIR
Trend Reversal Level: 90.8
Strategy today:No change. Sell rallies towards 90.0, stops above 90.8. Add to longs on a daily close below 88.00.
Chart: Making "lower highs" and "lower lows" but at a snail's pace.
Medium Term Trend: The Euro has pushed higher quite suddenly after days of languishing near 1.2100. This has turned momentum bullish and set the market up for another attempt at breaking 1.2350 in coming days. As the short term charts are a little overbought, and as 1.2350 is such key level, we will allow for a little more activity below here for a day or two, and then another lurch higher. Dips should be contained by 1.2150 and probably 1.2200, and any retracements to those levels are seen as good buying opportunities for a rally back to 1.2350. In the medium term picture, 1.2070 should now form a reasonable base and prices should not drop below here easily. Once we get a break above 1.2350, it should trigger a few more larger stop losses and cause more market players to reassess their medium term views - then on to more important long term resistance at 1.2580, before a breather.
Trend Phase:Direction UP. Probability GOOD
Trend Reversal Level: 1.2070
Strategy today:Buy at 1.2220, adding to 1.2180, stops under 1.2160. Target 1.2320, and eventually 1.2580.
Chart: Allow for a bit of consolidation early this week and then another attack on 1.2350. Above here triggers stops and will send prices up to LT resistance at 1.2600 before a breather.
GBP/USD
Medium Term Trend:Please refer to our special reports on the Pound at http://forex618.mywowbb.com for more detailed charts and analysis on the medium term trend. After breaking above 1.7600, the Pound should rally quickly to 1.7920 before consolidating its gains. All dips to 1.7600 - 1.7650 are seen as excellent opportunities to buy, but after such a long period of consolidation below 1.7600, and the clear "Diamond reversal pattern" formed in that region, dips might be shallow and brief, leaving many traders behind or buying at prices higher than they would like. If we are not able to buy decent dips, we will look to sell near 1.7920 if prices reach there today or tomorrow, for a short term pullback to 1.7750.
Trend Phase:Direction UP. Probability GOOD
Trend Reversal Level: 1.7500
Strategy today:Buy dips to 1.7650 - 1.7600, stops below 1.7550, for a rally to 1.7920. Sell at 1.7920, stops above 1.8000 for a dip to 1.7750.
Chart: All the signs of base forming and reversal should propel Cable to 1.7920, with dips far and few between.
Dollar Index
Medium Term Trend:Dropping suddenly after Easter and approaching key medium term support at 88.00. A break below there should see the Dollar approach 86.00, where many will have their stops. We continue to view the long term trend to Dollar weakness as technically and fundamentally intact, and only a rally above 91.00 would change our medium/long term view.
Trend Phase:Direction DOWN. Probability GOOD
Trend Reversal Level: 91.00
Strategy today:No change. Sell rallies towards 90.0, stops above 91.0. Add to longs on a daily close below 88.00.
Joined: March 23 2006
Online Status: Offline
Posts: 305
Posted: April 20 2006 at 01:57
Daily Currency report for Thursday April 20 2006
This is only a guide. Please refer to our specific entry signals for exact entries and stops.
Medium Term Trend: The Euro is consolidating under 1.2400 after several days of strong gains and ahead of the key Fibonacci confluence between 1.2400 and 1.2420. Whether or not we can push through here today, on to 1.2500, is not certain, and we would allow for another day or two between 1.2250 and 1.2350 before moving higher. If we get a strong close to this week, and perhaps a rally up to 1.2500, this will set the Euro up for more gains in coming weeks. As conditions are now overbought and several other currencies need to take a breather (see the Pound), we feel that we might get a reasonable dip today or tomorrow, allowing some profit taking and a chance for new longs to be added at better prices.
Trend Phase:Direction UP. Probability GOOD
Trend Reversal Level: 1.2070
Strategy today: Buy on dips to the 1.2250 region, stops under 1.2200, for a rally up to 1.2500 and then 1.2600.
Chart: We may get a chance to buy on dips today or tomorrow..
GBP/USD
Medium Term Trend:The third strong day in a row and more than 450 pips gained in that period means that Cable is going to need to slow down a little. The trend remains strongly bullish, but extremely overbought conditions and overhead resistance at 1.7950 mean that consolidation below here is needed. Any corrections should hold well above 1.7600, and probably above 1.7800, and any dips above these levels are seen as good opportunities to buy Pounds for more gains in coming weeks. Short term target is 1.8000 and then 1.8200.
Chart: Corrections may continue to be shallow, with first support at 1.7800.
Dollar Index
Medium Term Trend: The dollar is still testing key support at 88.00, and has rebounded slightly. Allow for a little more bouncing around above here and then a break below this week or early next. Then on to more important support at 86.00, and a lot of rethinking if we break below.
Trend Phase:Direction DOWN. Probability GOOD
Trend Reversal Level: 91.00
Strategy today:No change. Sell rallies towards 90.0, stops above 91.0. Add to longs on a daily close below 88.00.
Medium Term Trend: There is a good chance of a strong weekly close this week after the rally which started in the wee hours of Monday. Yesterday, we retraced 38% of the rally, and hourly studies look like a short term bottom has now formed at 1.2270, with a "spike low" reversal candle on the hourly chart helping to prop up the price. We should be able to hold above here the whole day, with a rally during Europe or NY today taking prices back up towards 1.2400 and, with a bit of luck, perhaps even higher. A drop below 1.2270 will see another small leg lower to 1.2220, and probably not much lower than 1.2200 at the most.
Trend Phase:Direction UP. Probability GOOD
Trend Reversal Level: 1.2070
Strategy today: Buy on dips to 1.2280, stops under 1.2260. Re-buy on a dip to 1.2230, stops well below 1.2200, for a rally up to 1.2500 and then 1.2600.
Chart: A perfect 38% correction with spike low hourly candles will help to generate a new rally today.
GBP/USD
Medium Term Trend:We said Cable needed a corrective "breather" and we got one. Correcting just a little more than expected, but very healthy for the upward trend, Cable has almost retraced 38% of the rally this week. If we can hold above 1.7680, the charts will be set up nicely for another run at 1.8000 today, forming a strong weekly finish. A close this week above 1.8000 - probably too much to expect - would be very bullish and would break the deadlock in place since late last year. Our eventual target for this leg of the rally is 1.8500.
Chart: Trying to base at 1.7750, but might have a go at 1.7680 - another good place to buy.
Dollar Index
Medium Term Trend:Bouncing from support at 88.00 as expected. Hopefully today we can retest this area, and perhaps even break below. Until then, allow for more work between 88.0 and 90.0.
Trend Phase:Direction DOWN. Probability GOOD
Trend Reversal Level: 91.00
Strategy today:No change. Sell rallies towards 90.0, stops above 91.0. Add to longs on a daily close below 88.00.
Medium Term Trend: The Euro had strong close last week, above the 50 day moving average for the first time in a year. This has set the single currency up for an attack on the 1.2500-1.2600 area which is a crucial technical obstacle to further significant gains this year. The attached chart shows the blue "head and shoulders" neck line around about 1.2500 which will try to knock the Euro back down into a long term decline. Please view our last special report in the forum at http://forex618.mywowbb.com/forum1/1-7.html for more details. For today, the Euro should try to hold above 1.2260 before rallying to 1.2500 during this week. A drop below 1.2260 should go no lower than 1.2200, 1.215 at the most, where more opportunities to buy will be presented.
Trend Phase:Direction UP. Probability GOOD
Trend Reversal Level: 1.2070
Strategy today: Buy on dips to 1.2280, stops under 1.2260. Re-buy on a dip to 1.2230, stops well below 1.2200, for a rally up to 1.2500 and then 1.2600.
Chart: Prices are in a good uptrend and should not drop lower than 1.2150 (Trend line).
GBP/USD
Medium Term Trend:Knocked back from 1.7950, the high in January this year and October last year, but likely to try again today or early this week. Allow for more work between 1.7950 and 1.7750 before another explosive move higher, breaking above 1.8000 and increasing bullish pressure immediately. Although unlikely, a dip below good support at 1.7750 will probably take the Pound down to 1.7700/1.7660 (1.7600 MAX) before renewed attempts at basing occur. An eventual break above 1.8000 should take the Pound quickly to 1.8300/8500.
Chart: Knocking on the door, but not through yet. A break above 1.8000 should trigger some serious short covering.
Dollar Index
Medium Term Trend:Another small gap lower has taken the index just below support at 88.0. The next stop should be 86.0 before another round of consolidation in what is likely to be a slow decline (rather than a dramatic sell-off) until stops are triggered above key levels in Euro and Pound. Hopefully, any rallies will now be contained at 89.0-89.50 and this week should see further Dollar weakness.
Trend Phase:Direction DOWN. Probability GOOD
Trend Reversal Level: 90.0
Strategy today:Sell rallies towards 89.0-89.50, stops above 90.0. Add to longs on a daily close below 88.00.
Chart: Another small gap lower, this time below support at 88.0
Medium Term Trend: Nothing has really changed since yesterday, except that we have edged slightly higher, this time just over 1.2400. Everything else remains the same - The Euro had strong close last week, above the 50 day moving average for the first time in a year. This has set the single currency up for an attack on the 1.2500-1.2600 area which is a crucial technical obstacle to further significant gains this year. For today, the Euro should try to hold above 1.2260 before rallying to 1.2500 during this week. A drop below 1.2260 should go no lower than 1.2200, 1.215 at the most, where more opportunities to buy will be presented.
Trend Phase:Direction UP. Probability GOOD
Trend Reversal Level: 1.2070
Strategy today: Buy on dips to 1.2280, stops under 1.2260. Re-buy on a dip to 1.2230, stops well below 1.2200, for a rally up to 1.2500 and then 1.2600.
Chart: Good support building at around 1.2280.
GBP/USD
Medium Term Trend:Wild intraday moves yesterday will have caused a few headaches, but did little to alter the technical picture. The key level overhead is the 1.7950/1.8000 area, with a break above there setting off some serious short covering. Until then (and it might take all week if the Pound is not quite ready for such an important break) allow for more work below here and above 1.7750. Although unlikely, any dips below 1.7750 should go no lower than 1.7650 (1.7600 MAX). Watch for chances to buy at these levels after clear signs of basing, perhaps a dramatic spike low.
Trend Phase:Direction UP. Probability GOOD
Trend Reversal Level: 1.7500
Strategy today: Buy dips to 1.7800/1.7760, stops below 1.7750, target 1.8000. Re-buy at 1.7700, stops below 1.7600.
Chart: Consolidating under the breakout level, and may do so again today.
Dollar Index
Medium Term Trend:No real change, but edging lower yesterday. It may be that we have to "fill the gap" around the 88.0 support level, so watch for a small rally, which will be an opportunity to re-sell. The next stop should be 86.0 before another round of consolidation in what is likely to be a slow decline (rather than a dramatic sell-off) until stops are triggered above key levels in Euro and Pound. Hopefully, any rallies will now be contained at 89.0-89.50 and this week should see further Dollar weakness.
Trend Phase:Direction DOWN. Probability GOOD
Trend Reversal Level: 90.0
Strategy today:Sell rallies towards 89.0-89.50, stops above 90.0. Add to longs on a daily close below 88.00.
Chart: Edging lower, but allow for some gap filling.
Medium Term Trend: Despite some volatility yesterday as we neared the 1.2450 mark, the euro has held fairly neatly at these new higher levels. This means there has been little opportunity for new positions, a drop in volatility and a market looking for new direction. The trend remains firmly upwards and it looks increasingly less likely that we will get the dip to 1.2300/2250 we had expected. Nevertheless, we will continue to allow for a correction to somewhere above 1.2260, with an (unlikely) drop below there going no lower than 1.2200, 1.2150 at the most, where more opportunities to buy will be presented. On the top side, 1.2500 - 1.2600 will present a major medium term obstacle to further gains, and so we expect some correction from there, with an eventual break higher increasing the rate of appreciation considerably.
Trend Phase:Direction UP. Probability GOOD
Trend Reversal Level: 1.2070
Strategy today: Buy on dips to 1.2280, stops under 1.2260. Re-buy on a dip to 1.2230, stops well below 1.2200, for a rally up to 1.2500 and then 1.2600.
Chart: Pushing slowly higher, but still vulnerable to a decent correction.
GBP/USD
Medium Term Trend:We have really gone nowhere in 5 days, which means that the technical picture has not changed all that much. Volatility yesterday around the 1.7900 level shows that there is some instability at these levels and that the price needs to move on, or move back fairly soon. So.....same again.....The key level overhead is the 1.7950/1.8000 area, with a break above there setting off some serious short covering. Until then (and it might take all week if the Pound is not quite ready for such an important break) allow for more work below here and above 1.7750. Although unlikely, any dips below 1.7750 should go no lower than 1.7650 (1.7600 MAX). Watch for chances to buy at these levels after clear signs of basing, perhaps a dramatic spike low.
Trend Phase:Direction UP. Probability GOOD
Trend Reversal Level: 1.7500
Strategy today: No change. Buy dips to 1.7800/1.7760, stops below 1.7750, target 1.8000. Re-buy at 1.7700, stops below 1.7600.
Chart: Creeping across the page for a week. Time for a move.
Dollar Index
Medium Term Trend:Edging lower again, but only by a tiny amount. It may be that we have to "fill the gap" around the 88.0 support level, so watch for a small rally, which will be an opportunity to re-sell. The next stop should be 86.0 before another round of consolidation in what is likely to be a slow decline (rather than a dramatic sell-off) until stops are triggered above key levels in Euro and Pound. Hopefully, any rallies will now be contained at 89.0-89.50 and this week should see further Dollar weakness.
Trend Phase:Direction DOWN. Probability GOOD
Trend Reversal Level: 90.0
Strategy today:Sell rallies towards 89.0-89.50, stops above 90.0. Add to longs on a daily close below 88.00.
Chart: Edging lower, but allow for some gap filling.
Medium Term Trend: The same as the previous day - a bit of intraday volatility and edging slightly higher and looking a little vulnerable. Again nothing much to add to the analysis. The trend remains firmly upwards and it looks increasingly less likely that we will get the dip to 1.2300/2250 we had expected. Nevertheless, we will continue to allow for a correction to somewhere above 1.2260, with an (unlikely) drop below there going no lower than 1.2200, 1.2150 at the most, where more opportunities to buy will be presented. On the top side, 1.2500 - 1.2600 will present a major medium term obstacle to further gains, and so we expect some correction from there, with an eventual break higher increasing the rate of appreciation considerably.
Trend Phase:Direction UP. Probability GOOD
Trend Reversal Level: 1.2100
Strategy today: Buy on dips to 1.2280, stops under 1.2260. Re-buy on a dip to 1.2230, stops well below 1.2200, for a rally up to 1.2500 and then 1.2600.
Chart: Pushing slowly higher, but still vulnerable to a decent correction.
GBP/USD
Medium Term Trend:Quite strange behaviour in Cable this week has seen a series of large "spikes" on each side of the market. This means that there is some instability and churning around looking for direction, as we get used to these new higher levels after months of stagnation lower down. Expect more of the same before a sudden break on one side or the other. The key level overhead is the 1.7950/1.8000 area, with a break above there setting off some serious short covering. Until then (and it might take all week if the Pound is not quite ready for such an important break) allow for more work below here and above 1.7750. Although unlikely, any dips below 1.7750 should go no lower than 1.7650 (1.7600 MAX). Watch for chances to buy at these levels after clear signs of basing, perhaps a dramatic spike low.
Trend Phase:Direction UP. Probability GOOD
Trend Reversal Level: 1.7500
Strategy today: No change. Buy dips to 1.7800/1.7760, stops below 1.7750, target 1.8000. Re-buy at 1.7700, stops below 1.7600.
Chart: Will we see a sudden correction or a surge higher. Six days going sideways should end soon.
Dollar Index
Medium Term Trend:The dollar continues to edge lower without returning to the breakout gap at the 88.0 mark. The further away we go from here, the smaller the chance of a re-visit to the gap level, but the risk still remains. Rallies should be contained below 88.50-89.50, setting up for the next stop at 86.0. Here another round of consolidation should set in, in what is likely to be a slow decline (rather than a dramatic sell-off) until stops are triggered above key levels in Euro and Pound.
Trend Phase:Direction DOWN. Probability GOOD
Trend Reversal Level: 90.0
Strategy today:Sell rallies towards 89.0-89.50, stops above 90.0. Add to longs on a daily close below 88.00.
Chart: heading lower, but a bounce to the gap is possible.
Medium Term Trend: The Euro has surged higher on the back of Bernanke's comments yesterday about a possible pause in interest rate hikes. There is enough momentum in the move to take the price higher still and we should see a test of 1.2580/1.2600 early today. We may not be able to push through there just yet, with month end on the weekend, and some position squaring ahead of Monday's holiday possible. Expect some consolidation below 1.2600, no lower than 1.2400/1.2380, before another surge higher. A daily close clearly above 1.2600 would be very bullish for the Euro and would firmly re-assert the trend to long term dollar weakness.
Trend Phase:Direction UP. Probability GOOD
Trend Reversal Level: 1.2100
Strategy today: Try tiny shorts at 1.2580/1.2600, stops well above 1.2620, or buy dips to 1.2400.
Chart: Powering higher and nearing long term resistance at 1.2600.
GBP/USD
Medium Term Trend:Following the euro, leaping up over 200 pips in almost an hour, and breaking through key resistance at 1.8000 - all in all a good day for the pound. Today may see yet more strong gains, fueled by stop losses and new momentum buyers. The next resistance is at 1.8190. Whether the pound will take a breather today and Monday, or continue on upwards immediately, is not clear, but any consolidative dips should be small and the price should try to hold above 1.7950/1.8000.
Trend Phase:Direction UP. Probability GOOD
Trend Reversal Level: 1.7550
Strategy today: Buy dips to 1.7950/1.8000, stops well below 1.7900. Try small shorts at 1.8180, stops well above 1.8200.
Chart: Breaking out and moving up. Expect shallow dips and strong rallies up to at least 1.8200.
Dollar Index
Medium Term Trend:No chance to fill any gaps and in a hurry to get to 86.0, the dollar moved down by the largest one day margin in several weeks. Expect more of the same over the next few days, perhaps preceded by a short period of consolidation. As and when we reach 86.0, expect a bounce, but no higher than 88.0, before a break below sets off dollar selling in earnest.
Trend Phase:Direction DOWN. Probability GOOD
Trend Reversal Level: 90.0
Strategy today:Sell rallies to 88.0 or try small longs near 86.0.
Chart: Should reach for 86.0 in coming days, and then a small bounce.
Medium Term Trend: In just one week, the euro has rushed up 300 pips to now test the key 50% Fibonacci of the entire rally in 2004 (1.2656). Conditions are also very oversold with hourly charts testing extreme short term levels. We remind that in strong trends like this one, oversold or overbought conditions are often ignored and trying to pick a top in this case can be somewhat risky. However, we do not want to buy at this level and a correction is due, if not from below 1.2660, then probably just above. For today, allow for another small rally to 1.2660/70, and then a sharp correction to probably no lower than 1.2550 - 1.2500. Above 1.2660 will probably lead to a final boost to 1.2700 and no higher than 1.2750 before a short term top is placed.
Trend Phase:Direction UP. Probability GOOD
Trend Reversal Level: 1.2200
Strategy today: Try tiny shorts at 1.2630/1.2650, stops above 1.2670. If stopped, try re-selling between 1.2700 - 1.2750. All dips to 1.2500 - 1.2550 are excellent opportunities to buy later in the week, if seen.
Chart: Trying to reach for 1.2660, the 50% retracement of the 2004 rally. Allow for a bit of over-shoot to 1.2700/50.
GBP/USD
Medium Term Trend:A fantastic week last week for Cable bulls, as the pound rallied from 1.7800 up to almost 1.8300 in a few short leaps. Resistance now comes in at 1.8280 - 1.8380, with the 1.8300 the key 50% retracement level of the 2004 rally. It is quite possible that the pound will overshoot 1.8300 and rally to somewhere below 1.8400, a daily resistance level in 2005, or (if things get totally out of hand) to 1.8500, the major swing high in 2005. This all makes for tricky trading and picking short term tops will not be easy. In the slightly bigger picture, all dips to near 1.8100 are seen as good buying opportunities, and last week's breakout level at 1.7950/1.8000 should form a strong base, with prices unlikely to drop below there any time soon.
Trend Phase:Direction UP. Probability GOOD
Trend Reversal Level: 1.7600
Strategy today: Try small shorts on rallies on clear signs of topping to 1.8280 - 1.8380, 1.8500 MAX. Buy any good sized dips above 1.8100.
Chart: Approaching good resistance between 1.8300 and 1.8400, but allow for a "blow-off" to 1.8500 if things really get going again this week.
Dollar Index
Medium Term Trend:The dollar dropped to support at 86.0 quicker than we expected, and has just exceeded it slightly. However, a daily close underneath 86.0 is needed to confirm the start of the next leg down towards Fibonacci supports at 85.0 and 83.0. After being stuck in a tight range for the first three months of this year, the move lower might take place sooner than expected. For today, allow for some consolidation above 86.0, with a clear break below here leading to another strong sell-off to 85.0.
Trend Phase:Direction DOWN. Probability GOOD
Trend Reversal Level: 89.5
Strategy today:Sell rallies to 87.0 - 88.0 or try small longs near 86.0. Re-buy dips to 85.00 for a short term correction.
Chart: First target at 86.0 now reached. Allow for a bit of consolidation, and then another leg lower to 85.0.
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