In anticipation of the tsunami of fundamental news which starts overnight in Japan here is a quick technical round up for the majors:
The usdjpy has been trading in a relatively narrow range for some time between 84.50 to the upside and 80.50 to the downside and is a difficult one to call on the daily chart. The recent fib retrace is now approaching 50% level and any breach here will take the price down to re-test the 61.8% level at 82 and should this fail to hold then expect to see the pair push lower to re-test the bottom trend line in the 81 region with a possible deeper move down towards 80.32 in due course. Both the 100 and 200 day ma’s are adding significant pressure with the pair continuing to remain waterlogged in the current price channel.
For cable it is interesting to take a medium term view of the current price action which is precariously balanced at USD1.5996 which corresponds to the 38.2% fib level from the all time high of July 2008. As such a break and hold above this level could signal a further extension of the recent bullish trend which has stalled, and we could then see the pair push towards a 50% retrace in the USD1.6799 area in due course where the previous rally of 2009 ultimately failed. As far as the daily chart is concerned we have now broken above key resistance in the USD1.57-USD1.59 area and this could provide a solid platform of support for the anticipated move higher.
Euro bulls take the pair by the horns as the price action on the daily chart continues to power higher trading at time of writing at USD1.3645. Last week’s price action breached the strong resistance at the 50% retrace from the USD1.5140 high of late 2009 and the key area for the medium term is now the 61.8% level which sits at USD1.3882. This price level also coincides with the start of some sustained and potential resistance and could cap the extent of the current move.
Bullish sentiment and a return of risk appetite has propelled the Aussie higher against the US dollar with today’s price action creating a wide spread up candle which took the pair back to parity once again and over the 38.2 retrace from its recent all time high of Dec 31 2010 at 1.0254. It is also interesting to note that the low of January 11th failed to breach the 61.8 fib at 0.9804 suggesting once again a continuation of the recent upwards trend for the aud usd.
Last week’s move higher in the usd cad has been capped at the 50% fib level at 1.0031 with the pair now falling back below the 31.8% and looking set to fall further once again as we move below parity. The usd cad continues to grind away at this price level, sliding ever lower as the Canadian dollar continues to strengthen, largely powered by solid fundamentals.
The recent rally by the usd chf appears to have petered out once again, having run into resistance at 0.9775 which happens to be the 61.8% fib level and today’s price action has seen the pair confirm this bearish view breaking below the 31.8% region as it trades down towards the 0.9488. The pair now look to re-test the 0.9315 region once again in due course.
Unsurprisingly the dollar index confirms the market’s present bearish sentiment towards the US dollar trading well below all four moving averages and trading at time of writing at 78. The 78 price handle is a key level for the index and any failure to hold here will see the index look to re-test the November 2010 low which sits at 76.2 – a fascinating and lively week ahead for forex trading.