Forex: The Risk Today

The Risk Today:

EurUsd It’s now been nearly three weeks that we have been locked in this well-trodden range for EURUSD, and yesterday morning’s re-test of the old 1.3700 resistance failed once more as bulls capitulated under comments from Greece’s Papandreou. However before we simply regurgitate the same old anticipated levels of supply and demand yet again, it’s worth highlighting a new development on the hourly chart; namely a potential uptrend channel forming within the range (and broader downtrend). If this is indeed a new uptrend, then the lower bound support can be expected around 1.3580 –an area that has already acted as a pivot point during a number of prior oscillations within the current range. Ultimately we still expect this sideways tussle to be won by the bulls, but to do that, we must first overcome 1.3700 and 1.3735 (false breakout high); even then we see a number of potent resistance levels above. 1.3800 is the long touted 50.0% fibonacci retracement of 1.2457-1.5145, with the significant downtrend resistance seen at 1.3840 currently. Just behind there lies 1.3850 major pivot level from the way down, followed by the 50-day moving average which has finally caught up some ground at 1.3949

GbpUsd A great big head-fake from GBPUSD yesterday, as the breach of the 6 week downtrend channel at 1.5160 was completely reversed in the afternoon session, and even went so far as breaching the lower bound of the nascent uptrend. We still believe there are decent arguments for a bullish correction from here however; firstly, the hammer candlestick on the weekly chart which is suggestive of a reversal of the prevailing downtrend, secondly our 1 hour stochastic oscillator has crossed upwards from deeply oversold territory, and thirdly the decent buying interest around 1.4975 looks to be providing a near-term floor to sell-offs. Nevertheless, expect resistance levels above here to come in the form of 1.5100 downtrend channel resistance, the back side of the former uptrend at 1.5125, then the psychologically important 1.5200 level where we failed yesterday.

UsdJpy USDJPY bulls will be feeling frustrated by the price action yesterday, as the post-payroll surging rally quickly ran out of steam against the back side of the former uptrend channel around 90.75, and since that failure the pair has traded limply back below both the 50-day and 100-day moving averages (90.59 and 90.17 respectively). The pair now rests on prior support at 89.95, but should the buying interest wane we can expect decent bids to come in around 89.50 –the former ceiling of the trading range. Really, for a continuation of the bullish move we need to see the pair overcome that sticky 90.50-80 zone, but as discussed yesterday, if the uptrend is re-broken the skies above there are clear for a trip to 91.90 (200-day moving average) and 92.15 resistance beyond.

UsdChf Not much to add on the technical picture for USDCHF today as the battle between speculators and the SNB keeps EURCHF firmly pinned down in its narrow channel (1.4620-1.4640), and EURUSD continues playing into its own ranges. The support levels on the downside are still seen at 1.0717 (23.6% Fibonacci retracement of 1.0131-1.0898) and 1.0690-1.0700 zone coinciding with prior support and minor uptrend vibration. Within the range we expect some offers around 1.0800 and 1.0830, then of course, the range highs just ahead of 1.0900. <

Resistance and Support:

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