Forex: The Risk Today

The Risk Today:

EurUsd The confluence of good European data, shockingly negative ADP payrolls and suspected quarter-end buying interest fuelled EURUSD higher yesterday; rallying relentlessly off the 1.3384 lows to 1.3561 highs so far. With the suitcases packed and planes booked for Easter holidays, it’s likely that liquidity will start thinning out acutely going into the long weekend, so we avoid looking for any ambitious targets on trades, instead preferring to punt for ultra short-term 30 pip moves between 1.3470 –1.3570 range. Above 1.3530 our intraday bias is for long trades (given the breach of the long term downtrend); but anticipate resistance above at 1.3610 which coincides with both the downtrend vibration channel of the last false break, and the upper edge of the 1 week uptrend. Near term support can be expected around the 1.3484 fibonacci level (61.8% of 1.2457 to 1.5145) and today’s lows 1.3476, then below there a major support at 1.3425 which represents the back side of the former break-out level and the lower bound of our current 1 week uptrend.

GbpUsd GBPUSD has been rampant since the break above the longer term downtrend, and after its brief consolidation phase, the pair has continued higher in its steep 1 week uptrend in total disregard of 1.5215 resistance, touching highs of 1.5248 so far. From here we now recalibrate our sights to the next target at 1.5350 pivot level, but beyond there are very few resistance levels until 1.5580! The few that we do have are the 1.5382 highs from 17 March, then the 50-day moving average which has now crept down to 1.5419. In terms of supports, the lower edge of the current steep uptrend is seen at 1.5140, then there is a scattering of further buying interest all the way down to 1.5040 before the back side of the former downtrend comes in at 1.4965. Really, only a break back below the major 1.4780 support (1 March low) would negate our bullish bias on this pair.

UsdJpy Right on cue, after bursting out the top side of the 3 year downtrend, USDJPY has made its pilgrimage to the 7 January highs at 93.77 (93.73 the high so far), but decent selling interest there has thus far prevented further gains. Given the 3.5% rally in the last 7 trading days, we now opt to cut most of our longs until we see more affirmative price action through the old highs. Obviously, a break of this magnitude through the 3 year downtrend is a dream for medium and long-term trend followers, but for the shorter term strategy we prefer to pocket the cash going into the holiday weekend and look to buy again on any dips. The back side of the former downtrend now comes in at 92.30 so expect significant buying interest ahead of there, and yesterday’s reaction lows at 92.85 is also expected to offer some bids.

UsdChf After a brief scare the day before, the short term uptrend was decisively broken in yesterday’s session, with the breach of 1.0605 rapidly continuing on down to 1.0500 support –overshooting as far as 1.0489. So far the pair has stabilize just above 1.0500, but should we see a continuation of selling pressure, the next supports to watch below come in at 1.0476 (200-day moving average), 1.0454 (100-day moving average) and then 1.0410 where the back side of the former downtrend comes into play. Rallies will find sellers now lining up at the 1.0605 breakout level, and above there resistance at 1.0660 (50-day moving average) 1.0680, and 1.0750.

Resistance and Support:

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