Risk Aversion Boosts the USD, JPY

USD trading broadly higher (except against the JPY) as the Greek political impasse is raises concerns and increases risk aversion. The IMF remained firm saying that Greece must deliver necessary economic reforms and that it is not acceptable for the country to seek laxer loan terms. German officials are speaking out as well calling the latest developments ‘very worrying' and saying that Greeks must decide whether or not they want to stay in the euro. It is another light day for economic data in the US with weekly mortgage applications rising by +1.7% and March wholesale inventories due out at 1000ET. UST yields continues their descent across the curve with the 10-year yield falling below the 1.80% level as a result of both increased risk aversion and increased speculation of QE3. The dollar index is trading above the 80.00 figure and may find the next level of resistance around the March 15 highs of around 80.70/75.

EUR is lower against most of the G10 currencies except the commodity block (AUD, NZD, CAD) as Greek concerns mount. It is unlikely that a new government will be formed given the current political divide and therefore new elections are probable in June. Without decisive leadership, markets are questioning the ability and willingness of the country to adhere to austerity measures required in order to receive future aid payments. Yield spreads are higher as a result of contagion fears and EUR/USD fell to lows that have not been seen since late January. German March data continued to surprise to the upside suggesting that Q1 growth figures may not indicate a recession in Germany with the latest trade surplus increasing by more than expected due to unexpected export growth of +0.9% (conns. -0.5%). This may not be enough to prevent the Euro zone from dipping back into recession however and growth concerns are also weighing on the common currency.

JPY is outperforming yet again as markets are favoring the JPY as the haven of choice. The Bank of Japan is actively engaged in easing and markets are only speculating on additional Fed measures, however the JPY is firming relative to the USD. One reason is the yen's correlation to UST yields which have declined markedly of late and another could be doubts that the BoJ will act aggressively. As we have noted previously, the BoJ's interpretation of “powerful easing” and the perception of traders varies significantly. With investors buying the yen despite rhetoric by Japanese officials indicating their readiness to act, it is clear that markets are disregarding such rhetoric as a serious threat.

CAD is testing the top end of its range against the USD as weaker oil prices and declining risk sentiment weigh on the Loonie. USD/CAD sees the 200-day SMA and horizontal resistance converge around the 1.0060 area which is a pivotal level. Softer US data has also weighed on the CAD as the health of the Canadian economy is largely tied to that of the US. We remain bullish on the CAD on the basis of central bank policy expectations with the Bank of Canada taking a more hawkish tone relative to other major economies.

GBP is trading mixed - higher against the commodity currencies, the euro, and the franc while weaker against the USD, JPY, and Scandies after UK retail sales surprisingly fell by -3.3% in April (cons. +0.6%). GBP/USD is below the 1.61 figure and 21-day SMA. It is approaching the pivotal 1.6050 zone which is around where the 23.6% Fibonacci retracement of the entire 2012 range comes in as well as around the prior highs of early April. The Bank of England will make its policy announcement tomorrow and our outlook is for no change in rates or in the asset purchases target to make the announcement a likely nonevent.

AUD lower on the broader risk environment as there was no economic data out of Australia overnight. The government's stance for tighter fiscal policy suggests more room for easy monetary policy and expectations of a loss of jobs in April and uptick in Australian unemployment is also putting pressure on the Aussie. The Aussie is underperforming today and AUD/USD is approaching parity which is a key psychological level and may provide near term support.

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EUR/USD Opens up 1.2870 as Spanish Yields Surge

Daily Forex Technicals | Written by FXTimes | May 09 12 13:37 GMT

The EUR/USD chart in the 1H time-frame shows a market with persistent bearish momentum. The RSI reading has held below 60 and has been able to tag 30. Price action continues to make lower highs and lows. The 5/9 European session saw equities fall, and Spanish yields surged, with 10-year notes pushing above 6.00% see in the daily time-frame below. This represents risk aversion and reflects the markets weighing on the euro.

Combined with the uncertainty of the Greek election and the relationship of the newly elected French president Hollande with German chancellor Merkel, these factors provided for the EUR/USD to hold below 1.30, and to break below 1.2950 heading into the 5/9 US session. The RSI reading in the 1H chart continues to reflect persistent bearish momentum.

The daily chart shows the next pivot being around 1.2870. This area was support on 12/29, then resistance 1/13, and support again 1/20 and 1/23. With consideration of a bearish market development, any bullish outlook from this pivot should be limited to 1.30. If the market indeed holds below 1.30, our bearish outlook might not be over. The 1.2625-1.2670 2012 lows could be in sight.

There will be a meeting between Hollande and Merkel tomorrow. Hollande is a leftist and expected to fight the German-lead austerity measures, where Sarkozy (ex-French president) was more agreeable with Merkel. If the market sees their differences being another barrier to solving the Eurozone debt crisis, the EUR/USD can open up 1.2625-1.2670 without significant correction from the 1.2870 pivot.

 

FXTimes

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness.

FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analyses.

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USD/CAD Mid-Day Outlook

Daily Pivots: (S1) 0.9933; (P) 0.9977; (R1) 1.0032; More.

USD/CAD rises to as high as 1.0063 so far today and the break of 1.0053 resistance affirms the view that whole consolidation pattern from 1.0656 is finished already at 0.9799. Intraday bias remains on the upside for trend line resistance at 1.0109 next. Sustained there should confirm this bullish case and target 1.0522/0656 resistance zone next. On the downside, below 0.9997 minor support will turn bias neutral and bring consolidations. But downside should be contained above 0.9922 and bring another rally.

In the bigger picture, current development argues that the consolidation pattern from 1.0656 has completed with three waves down to 0.9799 already, ahead of 0.9725 support as expected. Rise from 0.9406 medium term bottom is possibly resuming. As noted before, price actions from 0.9406 could either be consolidation to fall from 1.3063 or the third leg of the whole consolidation pattern from 2007 low of 0.9056. In either case, another high above 1.0656 is anticipated and USD/CAD should reach 38.2% retracement of 1.3063 to 0.9406 at 1.0803 and above.

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Trade Idea: USD/CAD – Buy at 0.9900

USD/CAD – 0.9996

Recent wave: Only wave v of c has ended at 0.9407 and A-B-C correction has possibly ended at 1.0658

Trend:  Near term down

Original strategy : 

Buy at 0.9880, Target: 1.0030, Stop: 0.9820

Position: -
Target:  -
Stop:-

New strategy  : 

Buy at 0.9900, Target: 1.0050, Stop: 0.9840

Position: -
Target:  -
Stop:-

As the greenback has continued to trade with a firm undertone after staging a strong rebound from 0.9800, adding credence to our view that a temporary low has been formed at 0.9800 and intra-day breach of previous resistance at 1.0053 suggests near term bullishness remains for retracement of recent downtrend to 1.0080 and 1.0100, however, near term overbought condition should limit upside to 1.0150 and risk is seen for a retreat later.

In view of this, we are still looking to turn long on dips as support at 0.9862 (Friday’s low) should limit downside. Only breach of 0.9828 would revive bearishness and bring a retest of recent low at 0.9800, break there would extend recent decline in wave C from 1.0524 to 0.9758 (100% projection of 1.0658-0.9892 measuring from 1.0524), however, near term oversold condition should limit downside to 0.9720/25 and still reckon 0.9700 would hold, risk from there has increased for a rebound to take place later.

To recap, early breach of 1.0108 signals the wave iv from 0.9931 has ended at 1.0854 or 1.0674 (with a short (c)), under this count, the wave v has commenced with minor wave (i) ended at 0.9980 and wave (ii) has possibly ended at 1.0287 with (a) at 1.0374, (b): 0.9977 and a short (c) at 1.0287, the breach of 0.9931 confirms wave (iii) is unfolding for weakness towards 0.9200-10 (50% projection of 1.0854-0.9446 measuring from 0.9914).

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US Session: Orders and Options Watch

EUR: The single currency dropped again today on risk aversion and option barrier at 1.2950 was tripped, however, more bids from U.S. and Middle East names are still noted above next barriers at 1.2925 and 1.2900 with stops placed below latter level. On the upside, offers from various parties are lined up at 1.2990-00 and also at 1.3040, followed by mixtures of offers and stops located at 1.3065-75 and further out at 1.3095-00.

GBP: The British pound also slipped in London session and stops below 1.6080 were tripped, however, fresh demand from Middle East names are still noted at 1.6060-65 and mixtures of bids and stops is located at 1.6050 and further out at 1.6000. On the upside, offers are now reported at 1.6120-30 and also at 1.6150-60 with stops building up above 1.6170 and 1.6200 (large).

CHF: The greenback moved higher on dollar's broad-based strength against the European currencies and offers at 0.9270-80 were absorbed, however, offers from European names are still noted at 0.9295-00, followed by mixture of offers and stops at 0.9330-40. On the downside, bids are raised to 0.9240-50 and more buying interests are tipped at 0.9215-20 with stops building up below 0.9190 and 0.9170.

JPY: Dollar dropped quite sharply in part due to cross-buying in yen (option barrier at 103.00 were tripped) and barrier at 79.50 was also triggered, however, bids from Japanese investors are still noted at 79.20-25 and above next barrier at 79.00 with more stops placed below there. On the upside, offers are lined up from 79.80 up to 80.00 with stops building up above 80.10 with bigger sell orders located at 80.40-50.

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EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.2971; (P) 1.3018 (R1) 1.3054; More.....

Break of 1.2954 indicates that recent decline has resumed. Intraday bias in EUR/USD is back on the downside. As noted before, current development suggest that rebound from 1.2625 is already completed at 1.3486. EUR/USD should target a test on 1.2625 low first. Also, fall from 1.4939 is possibly resuming too and break of 1.2625 will target 61.8% projection of 1.4246 to 1.2625 from 1.3486 at 1.2484 next. Though, above 1.3065 will dampen this immediate bearish view and turn bias neutral first.

In the bigger picture, fall from 1.4939 is treated as a falling leg inside the consolidation pattern that started at 1.6039 (2008 high) and current development suggests that it's not finished yet. Break of 1.2625 would likely pave the way to 1.1875 and below as the consolidation extends. Meanwhile, break of 1.3486 resistance should now indicate that the fall from 1.4939 is finished and will turn near term outlook bullish for 1.5 psychological level to continue the long term consolidation.

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EUR/JPY Mid-Day Outlook

Daily Pivots: (S1) 103.46; (P) 103.94; (R1) 104.37; More

EUR/JPY's decline resumed after brief consolidation and reaches as low as 102.88 so far. Intraday bias is back on the downside 61.8% retracement of 97.03 to 111.43 at 102.53. Break will pave the way to retest 97.03 low. On the upside, 104.44 minor resistance will turn bias neutral and bring consolidations. But upside should be limited well below 108.00 and bring another fall.

In the bigger picture, with EUR/JPY now back below 55 days and 55 weeks EMA, the development is starting to favor the case that the down trend from 169.69 isn't completed yet. That is another low below 97.03 would be seen. Nonetheless, note that price actions from 139.21 are likely unfolding as a falling wedge pattern with bullish convergence condition in weekly MACD. Current fall from 111.43 should be the last leg in such pattern in the bearish case. And thus, the break of 97.03 support should be marginal and strong support should be seen there to finally bring trend reversal. Hence, while deeper decline could be seen, we'll look for bottoming signs as EUR/JPY breaks 97.03. Meanwhile, above 111.43 will revive the case that EUR/JPY has indeed bottomed and would turn outlook bullish.

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Trade Idea Wrap-up: USD/CHF – Buy at 0.9200

USD/CHF - 0.9278

Most recent candlesticks pattern    : N/A
Trend                                    : Near term up

Tenkan-Sen level                       :0.9272
Kijun-Sen level                     :0.9256
Ichimoku cloud top                     :0.9225
Ichimoku cloud bottom                 :0.9193

Original strategy : 

Buy at 0.9200, Target: 0.9310, Stop: 0.9165

Position: -
Target:  -
Stop:- 

New strategy  :  

Buy at 0.9200, Target: 0.9310, Stop: 0.9165

Position: -
Target:  -
Stop:- 

Although dollar’s breach of previous resistance at 0.9272 confirms the rise from 0.9043 low is still in progress and further gain to 0.9300-10 is underway, near term overbought condition should limit upside to previous resistance at 0.9335 and reckon 0.9350-60 would hold from here, risk from there is seen for a retreat later.

In view of this, would not chase this move here and we prefer to buy dollar on pullback as the Ichimoku cloud bottom (now at 0.9193) should limit downside, bring another rise. Only below previous resistance at 0.9174 would suggest top is formed and risk retracement of the rise from 0.9043 to 0.9158 (another previous resistance, however, reckon 0.9130 would limit downside and support at 0.9115 would remain intact.

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AUD/USD Mid-Day Outlook

Daily Pivots: (S1) 1.0066; (P) 1.0141; (R1) 1.0195; More

Intraday bias in AUD/USD remains on the downside for the moment and current fall should target 100% projection of 1.0852 to 1.0225 from 1.0473 at 0.9846 next. On the upside, above 1.0219 minor resistance will turn bias neutral again and bring consolidations. But in that case, upside of recovery is expected to be limited below 1.0473 resistance and bring fall resumption.

In the bigger picture, price actions from 1.1079 high are treated as a consolidation pattern in the larger up trend. Current development suggest that the third leg has started at 1.0852 and deeper decline would now be seen to 0.9387/9663 support zone. Though, strong support is expected from there to contain downside and bring rebound. Meanwhile, above 1.0473 will dampen this bearish view and bring another rise to extend the rebound from 0.9387 to 1.0852/1079 zone.

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GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.6122; (P) 1.6160; (R1) 1.6196; More...

GBP.USD drops further to as low as 1.6066 so far today. Intraday bias remains on the downside with focus on 1.6060 resistance turned support. Break there will indicate that rise from 1.5602 is finished and will bring deeper decline to 1.5818 support for confirmation. On the upside, though, above 1.6198 will flip bias back to the upside for 1.6300 and above.

In the bigger picture, price actions from 1.3503 (2009 low) are treated as consolidations to long term down trend from 2.1161, no change in this view. Current development suggests that such consolidation is still in progress with rise from 1.5234 as another rising leg. Some resistance might be seen below 1.6746 if that's a triangle pattern. But this is far from being certain. Indeed, rise from 1.5234 could eventually break 1.7043 resistance before completion. But after all, strong resistance should be seen at 50% retracement of 2.1161 to 1.3503 at 1.7332 to limit upside to conclude the consolidation.

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Trade Idea Wrap-up: GBP/USD – Sell at 1.6155

GBP/USD - 1.6114

Most recent candlesticks pattern : N/A
Trend                                    : Near term down

Tenkan-Sen level                       :1.6112
Kijun-Sen level                        :1.6118
Ichimoku cloud top                     :1.6158
Ichimoku cloud bottom                 :1.6158

Original strategy :  

Sell at 1.6140, Target:: 1.6040, Stop: 1.6175

Position: -
Target:  -
Stop:-

New strategy  : 

Sell at 1.6155, Target:: 1.6040, Stop: 1.6190

Position: -
Target:  -
Stop:-

Cable’s intra-day selloff after meeting renewed selling interests around the Ichimoku cloud suggests the decline from 1.6304 top is still in progress and further weakness to 1.6040 would be seen, however, near term oversold condition should limit downside to previous support at 1.6009 and risk from there is seen for a rebound later.

In view of this, we are looking to turn short on recovery as the Ichimoku cloud (now at 1.6158) should limit upside, bring such a decline. Only above minor resistance at 1.6169 would abort and signal an intra-day low is formed, bring a stronger rebound to yesterday’s high of 1.6199.

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Forex Broker

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Since large financial institution forex brokers often require a $500,000 to $1 million dollar trade minimum, most people go with a private or smaller forex brokerage firm. However, it is important to note that forex brokers must be able to have a wide amount of leverage, and so they are usually tied to the larger financial institutions. You want to ensure that any forex broker you choose is registered with regulators. FX Club, for example, is a Futures Commission Merchant (FCM) which is registered with the National Futures Association, and therefore is regulated by Commodity Futures Trading Commission. It is very important that you check FCM before signing with a forex broker to ensure that they are registered, and therefore are accountable to behave in a legal and ethical manner. Furthermore, it is recommended that you research the forex broker to ensure they are licensed and examine the amount of time they have been a forex broker. Longevity in the forex broker industry shows that they are stable and reliable. It is highly recommended to find a forex broker that has longevity, stability, and is a member of the FCM. In this manner, you are protecting your investment.

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Trade Idea Update: USD/CHF – Buy at 0.9200

USD/CHF - 0.9286

Original strategy : 

Buy at 0.9195, Target: 0.9295, Stop: 0.9160

Position: -
Target:  -
Stop:- 

New strategy  :  

Buy at 0.9200, Target: 0.9310, Stop: 0.9165

Position: -
Target:  -
Stop:- 

Although current breach of previous resistance at 0.9272 confirms the rise from 0.9043 low is still in progress and further gain to 0.9300-10 is underway, near term overbought condition should limit upside to previous resistance at 0.9335 and reckon 0.9350-60 would hold from here, risk from there is seen for a retreat later.

In view of this, would not chase this move here and we prefer to buy dollar on pullback as the Ichimoku cloud bottom (now at 0.9193) should limit downside, bring another rise. Only below previous resistance at 0.9174 would suggest top is formed and risk retracement of the rise from 0.9043 to 0.9158 (another previous resistance, however, reckon 0.9130 would limit downside and support at 0.9115 would remain intact.

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EURUSD: Weakens, Eyes Key Support Levels

Daily Forex Technicals | Written by FXTechstrategy | May 09 12 14:07 GMT

EURUSD: With EUR on the verge of reversing its Monday gains, the risk is now building up towards the 1.2930/00 levels. Below here will open the door for a run at the 1.2879 level, its Jan 23'2011 low. As long as the 1.3387 level remains as resistance this view remains intact. A decisive break and hold below the 1.2879 level will pave the way for move lower towards the 1.2733 level. Its daily RSI is bearish and pointing lower supporting this view. Alternatively, the pair will have to break and hold above the 1.3387 level to end its broader weakness and turn attention to the 1.3484 level. A cut through here will push the pair further higher towards its Dec 02'2011 high at 1.3547. Further out, price extension if seen will aim at its weekly 200 ema at 1.3642. All in all, EUR remains biased to the downside medium term though facing bear threats.

 

Mohammed Isah
Market Analyst
http://www.fxtechstrategy.com/

This report is prepared solely for information and data purposes. Opinions, estimates and projections contained herein are the author's own as of the date hereof and are subject to change without notice. The information and opinions contained herein have been compiled or arrived at from sources believed to be reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness and neither the information nor the forecast shall be taken as a representation for which the author incur any responsibility. The does not accept any liability whatsoever for any loss arising from any use of this report or its contents. This report is not construed as an offer to sell or solicitation of any offer to buy any of the currencies referred to in this report

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Trade Idea Update: EUR/USD – Sell at 1.3060

EUR/USD – 1.2943
Original strategy : 

Sell at 1.3060, Target: 1.2960, Stop: 1.3095

Position: -
Target:  -
Stop:-

New strategy  :  

Sell at 1.3060, Target: 1.2960, Stop: 1.3095

Position: -
Target:  -
Stop:-

Although current breach of this week’s low at 1.2956 signals recent decline from 1.3284 top is still in progress and weakness to 1.2920-25 is likely, loss of near term momentum should limit downside to 1.2900, risk from there remains for a much needed corrective rebound to take place. Above the Kijun-Sen (now at 1.2987 would bring test of intra-day high of 1.3008, then the Ichimoku cloud bottom (now at 1.3027) but 1.3065-67 (previous resistance and current level of the upper Kumo) should limit upside, bring another decline.

In view of this, would not chase this decline here and we prefer to sell euro on recovery. Only break of previous support at 1.3095 would signal a temporary low is formed and bring retracement of recent decline to 1.3120.

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Trade Idea Update: GBP/USD – Sell at 1.6140

GBP/USD - 1.6086

Original strategy :  

Bought at 1.6130, stopped at 1.6095

Position: - Long at 1.6130
Target:  -
Stop:- 1.6095

New strategy  : 

Sell at 1.6140, Target:: 1.6040, Stop: 1.6175

Position: -
Target:  -
Stop:-

Cable’s intra-day selloff after meeting renewed selling interests around the Ichimoku cloud suggests the decline from 1.6304 top is still in progress and further weakness to 1.6040 would be seen, however, near term oversold condition should limit downside to previous support at 1.6009 and risk from there is seen for a rebound later.

In view of this, we are looking to turn short on recovery as the Ichimoku cloud (now at 1.6158) should limit upside, bring such a decline. Only above minor resistance at 1.6169 would abort and signal an intra-day low is formed, bring a stronger rebound to yesterday’s high of 1.6199.

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USD Index Confirming Breakout; 81.60-82.00 Pivot Zone in Sight

Daily Forex Technicals | Written by FXTimes | May 09 12 15:41 GMT

Risk aversion continues to reign, and the USD continue to gain across the board, especially against the commodity currencies. The Euro also is pressured by the uncertainty of the Greek election and the relationship between new French president Hollande and German Chancellor Merkel. (Sarkozy has been agreeable to the German-led austerity measures).

The USD Index heavily weighed by the euro, therefore is in a strong breakout to the upside. The daily chart shows the market pushing above a recent declining trendline as well as the 80.35 pivot. This opens up a very short-term resistance pivot at 80.75 which was resistance in March 2012, but also resistance in Dec 2011 , and support again in Jan. 2012.

Above 80.75 and the 81.00 handle, the market opens up to 81.60, which was the resistance pivot Nov. 30/Dec.1 2010, and then again Jan. 2011. The market reacted there wish swings down to about 79.00 where it found support until mid-Jan.2011. Right above 81.60, the 82.00 handle was also the high from Jan. 2012. Therefore, the 81.60-82.00 zone is in sight as a potential target, as well as a potential resistance. An aggressive outlook for a reaction here is down to 79.00 like in the end of 2010-beginning of 2011. However, a conservative target could be back to the 80.75-81.00 area.

 

FXTimes

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness.

FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analyses.

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Trade Idea Wrap-up: USD/JPY – Stand aside

USD/JPY – 79.57

Most recent candlesticks pattern   : N/A
Trend                              : Near term down

Tenkan-Sen level              : 79.63
Kijun-Sen level                   : 79.69
Ichimoku cloud top                : 80.01
Ichimoku cloud bottom            : 79.88

New Strategy  :   

Stand aside

Position: -
Target:  -
Stop:-

Dollar’s breach of support at 79.64 signals recent decline has resumed and bearishness remains for further weakness to 79.20/25, however, near term oversold condition should prevent sharp fall below 79.00 and risk from there is seen for another corrective rebound to take place later this week.

In view of this, would not chase this decline here and we would stand aside in the meantime. Above intra-day resistance at 79.95 would suggest low Is possibly formed and bring test of the upper Kumo (now at 80.01) but break of yesterday’s high of 80.098 is needed to confirm, bring a stronger rebound to 80.40 first.

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Trade Idea: EUR/GBP – Stand aside

EUR/GBP – 0.8036 

Recent wave: v of wave 3 has possibly ended at 0.8067 but wave 4 should hold below 0.9050

Trend: Down

Original strategy : 

Bought at 0.8080, stopped at 0.8035

Position: - Long at 0.8080
Target:  -
Stop:- 0.8035

New strategy  : 

Stand aside

Position: -
Target:  -
Stop:-

As the single currency has fallen again after brief recovery, suggesting recent downtrend is still in progress and near term downside risk remains for further weakness to psychological support at 0.8000, however, loss of near term downward momentum should prevent sharp fall below there and reckon 0.7970/75 would hold from here, bring a much-needed correction later.

In view of this, would not chase this decline here and would be prudent to stand aside in the meantime. Above 0.8090 would suggest a temporary low is possibly formed and bring retracement of recent decline to 0.8139-43 resistance which is likely to limit upside and price should falter below 0.8160-65, bring another decline.

Our preferred count is that, after forming a major top at 0.9805 (wave V), (A)-(B)-(C) correction is unfolding with (A) leg ended at 0.8400 (A: 0.8637, B: 0.9491 and 5-waver C ended at 0.8400. Wave (B) has ended at 0.9413 and impulsive wave (C) has either ended at 0.8067 or may extend one more fall to 0.8000 before prospect of another rally. Current breach of indicated resistance at 0.9043 confirms our view that the (C) leg has ended and bring stronger rebound towards 0.9150/54, then towards 0.9240/50.

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Trade Idea Wrap-up: EUR/USD – Sell at 1.3060

EUR/USD – 1.2946
Most recent candlesticks pattern : N/A
Trend     : Near term down

Tenkan-Sen level               :1.2956
Kijun-Sen level                 :1.2977
Ichimoku cloud top              :1.3067
Ichimoku cloud bottom          :1.3021

Original strategy : 

Sell at 1.3060, Target: 1.2960, Stop: 1.3095

Position: -
Target:  -
Stop:-

New strategy  :  

Sell at 1.3060, Target: 1.2960, Stop: 1.3095

Position: -
Target:  -
Stop:-

Although current breach of this week’s low at 1.2956 signals recent decline from 1.3284 top is still in progress and weakness to 1.2920-25 is likely, loss of near term momentum should limit downside to 1.2900, risk from there remains for a much needed corrective rebound to take place. Above the Kijun-Sen (now at 1.2977 would bring test of intra-day high of 1.3008, then the Ichimoku cloud bottom (now at 1.3021) but 1.3065-67 (previous resistance and current level of the upper Kumo) should limit upside, bring another decline.

In view of this, would not chase this decline here and we prefer to sell euro on recovery. Only break of previous support at 1.3095 would signal a temporary low is formed and bring retracement of recent decline to 1.3120.

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Trade Idea Update: USD/JPY – Stand aside

USD/JPY – 79.58

Original strategy : 

Bought at 79.85, stopped at 79.50

Position: - Long at 79.85
Target:  -
Stop:- 79.50

New Strategy  :   

Stand aside

Position: -
Target:  -
Stop:-

Dollar’s breach of recent support at 79.64 signals recent decline has resumed and bearishness remains for further weakness to 79.20/25, however, near term oversold condition should prevent sharp fall below 79.00 and risk from there is seen for another corrective rebound to take place later this week.

In view of this, would not chase this decline here and we would stand aside in the meantime. Above intra-day resistance at 79.95 would suggest low Is possibly formed and bring test of the upper Kumo (now at 80.01) but break of yesterday’s high of 80.098 is needed to confirm, bring a stronger rebound to 80.40 first.

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EUR/USD Elliott Wave Analysis

EUR/USD – 1.3036

EUR/USD:  Wave (B) ended at 1.5145 and wave I of (C) ended at 1.1876

The single currency only recovered to as high as 1.32843 last week before running into renewed selling interests and dropped in line with our expectations and although today’s breach of previous support at 1.2975-95 signals the fall from 1.3486 has resumed, near term oversold condition should limit downside to 1.2953 (61.8% Fibonacci retracement of 1.2624-1.3486) and 1.2890-00 is likely to hold on first testing, price should stay well above 1.2800, bring another rebound later.

Our preferred count on the daily chart remains that a wave (II) from 1.2329 ended at 1.5145 with A-leg ended at 1.4720, followed by wave B at 1.2457, the wave C from there was also a 3 legged move and is labeled as (a): 1.3739, (b): 1.2885, the wave iii of the 5-waver (c) from 1.2885 has ended at 1.4339 and wave iv is a triangle ended at 1.3878 and wave v formed a top at 1.5145.

The decline from there is a 5-waver (C) with minor wave (i) of I of (C) ended at 1.4218 with wave (ii) ended at 1.4580, wave (iii) ended at 1.3267 and wave (iv) ended at 1.3692 and wave (v) ended at 1.1876, this is also the low of wave I of (C) and wave II has possibly ended at 1.4940, hence wave III is now in progress with 1, 2, (1), (2) labeled as indicated.

On the upside, although current rebound suggests initial bounce to 1.3100 would be seen, renewed selling interests should emerge around 1.3180 and bring another decline to aforesaid downside targets. Only break of said resistance at 1.3284 would abort and signal a temporary low is formed and bring another rebound to previous resistance at 1.3385 but still reckon price would falter well below resistance at 1.3486, bring further consolidation. In the event euro breaks above said resistance at 1.3486, this would bring a stronger retracement of the fall from 1.4249 to 1.3628 (61.8% Fibonacci retracement of 1.4248-1.2624) but reckon 1.3782 (50% Fibonacci retracement of 1.4940-1.2624) would cap upside, bring retreat later.

Recommendation: Sell at 1.3180 for 1.2980 with stop above 1.3285.

Euro's long-term uptrend started from 0.8228 (26 Oct 2000) with an impulsive structure. The rise from 0.8228 to 0.9593 (5 Jan 2001) is labeled as wave I, the retreat to 0.8352 (6 Jul 2001) is wave II and the rally to 1.3670 (31 Dec 2004) is wave III. Wave IV from there ended at 1.1640 (15 Nov 2005), the subsequent upmove to 1.6040 (July 15, 2008) is treated as wave V, the major selloff from the record high of 1.6040 to 1.2329 (October 27, 2008) signals a reversal has taken place with (I) leg ended at 1.2329 and once (II) ended at 1.5145, wave (III) itself is an extended move with I: 1.1876 and complex wave II should be limited to 1.5145, bring wave III decline later.

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As the UK Observes May Day, GBP/USD Pulls Back

Daily Forex Technicals | Written by FXTimes | May 07 12 11:26 GMT

5/7 - The UK is observing May Day, a bank holiday. The price action seen in the GBP/USD is a pullback against last week's decline that went from 1.63 down to 1.6120 (near 38.2% retracement of the Apr 14-30 upswing from 1.5826 to 1.6305. Note that during the dip, the 1H RSI reading has been held under 60 while tagging 30. This is a sign of persistent bearish momentum. As we gear up for the 5/7 US trading session.

As the market pulls back, the GBP/USD is now trading near the bottom of the consolidation established during May2 -May 4. If the 1H RSI reading pushes above 60, and price action pushes above the declining trendline, we can shelve the bearish outlook and consider a sideways market. A break above 1.62 will clear the trendline and the 200-hour simple moving average. The bullish outlook is limited to about 1.6280 when it will meet a declining trendline seen in the daily chart, OR 1.63, the 4/30 high.

The daily chart shows that the market is coming off a 5-session decline that followed a 10-session rally. If the market does continue to extend lower, the next pivot to monitor is 1.6070 (1.6068 is 50% retracement). Below that a key support resides around 60, around the rising trendline that goes back to the Jan. low of 1.5240.

The decline in the GBP/USD is considered a correction to a bullish market, unless there is a break below the 1.60 and support clusters around it. Also, if the daily RSI pushes below 40, the bullish momentum would be lost.

 

FXTimes

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness.

FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analyses.

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Forex Technical Analysis

Current level - 1.3016

Today's sell-off marked a local low at 1.2954 and although the outlook is still bearish below 1.3100 resistance, there is a minor reversal on the minute frames and I favor a rise towards 1.3160, en route to 1.3280. Initial support is projected at 1.2987 and crucial is 1.2954.

Profit-taking affects gold curbing silver and platinum

Current level - 79.84

Due to the existence of the consolidation pattern above 79.63 low my intraday outlook is bullish, for a rise towards 80.60-90. Initial resistance is projected at 80.07 and crucial on the downside is 79.60.

Current level - 1.6136

I think, that the whole slide from 1.6303 high is a corrective pattern, so my outlook is bullish, for a break through 1.6202, en route to 1.6303 and 1.6450. Initial minor support is 1.6130, followed by the major one 1.6075 and key resistance can be spotted at 1.6165, currently guarding the negative bias on the 1h. frame

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Trade Idea Update: USD/CHF – Buy at 0.9190

USD/CHF - 0.9224

Original strategy : 

Buy at 0.9190, Target: 0.9290, Stop: 0.9155

Position: -
Target:  -
Stop:- 

New strategy  :  

Buy at 0.9190, Target: 0.9290, Stop: 0.9155

Position: -
Target:  -
Stop:- 

Despite Friday’s retreat to 0.9116, as the greenback has rallied after holding above previous support at 0.9115, suggesting the rise from 0.9043 low is still in progress, however, as price has retreated from 0.9272, pullback to 0.9191-93 (intra-day low and current level of the Kijun-Sen) is likely, however, renewed buying interest should emerge there and bring another rise later. A break of said resistance at 0.9272 would extend the aforesaid upmove to 0.9300 but loss of near term momentum should prevent sharp move beyond previous resistance at 0.9335.

In view of this, we are looking to buy dollar on pullback. Below previous resistance at 0.9174 would suggest top is possibly formed and risk test of the Ichimoku cloud top (now at 0.9140) but break of said support at 0.9115 is needed to confirm.

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GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.6129; (P) 1.6166; (R1) 1.6190; More...

No change in GBP/USD's outlook as consolidation from 1.6300 continues. With 1.6060 resistance turned support intact, there is no sign of reversal yet and recent rally is still in favor to continue. Above 1.6300 will target 100% projection of 1.5234 to 1.5991 from 1.5602 at 1.6359 next. As noted before, whole decline from 1.6764 is finished at 1.5234 and current rise could target this 1.6746 resistance. Nonetheless, break of 1.6060 will dampen this bullish view and turn focus back to 1.5818 support first.

In the bigger picture, price actions from 1.3503 (2009 low) are treated as consolidations to long term down trend from 2.1161, no change in this view. Current development suggests that such consolidation is still in progress with rise from 1.5234 as another rising leg. Some resistance might be seen below 1.6746 if that's a triangle pattern. But this is far from being certain. Indeed, rise from 1.5234 could eventually break 1.7043 resistance before completion. But after all, strong resistance should be seen at 50% retracement of 2.1161 to 1.3503 at 1.7332 to limit upside to conclude the consolidation.

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USD/JPY Elliott Wave Analysis

USD/JPY – 79.83

USD/JPY – Wave (1) of 3 ended at 84.82 and wave (2) possibly ended at 94.99

Although the greenback has fallen again after meeting renewed selling interest at 80.61 last week and marginal weakness from here cannot be ruled out, as this move from 84.19 still looks corrective, downside should be limited to 79.55 and bring another rise later. Above 80.61 would be the first sign that low is formed and bring a stronger rebound to 81.78, break there would suggest low is formed and further gain to 82.45-50 but only break of resistance at 83.31-39 would signal the correction from 84.19 has ended and bring retest of this level eventually.

Our preferred count is that, wave 1 ended at 87.10 followed by a 3-legged wave 2 at 101.45 and the wave 3 is unfolding with wave (1) of 3 sub-divided into i: 91.73, ii: 97.79, iii: 88.01, then wave iv at 92.33, therefore, the wave v of (1) has ended at 84.82 and wave (2) is labeled as A leg: 93.78), B leg of wave (2) ended at 88.14 and C leg has ended at 94.99.

Under this count, wave (3) of 3 is under way with i ended at 88.15, followed by wave ii at 93.65 and wave iii has formed a low at 80.21. The wave iv is a triangle which ended at 85.53 and wave v has either formed a low at 75.31, the breach of 80.25 resistance adds credence to this view and further gain to 84.50 and later towards 85.00 would be seen but reckon resistance at 85.53 (previous 4th) would remain intact.

On the downside, below previous resistance at 79.55 would shift risk to downside for a deeper correction of recent upmove to 79.15 (61.8% Fibonacci retracement of 76.03-84.19), however, reckon downside would be limited to 78.50-60 and previous resistance at 78.25-30 would hold, bring another rise later.

Recommendation: Hold long entered at 80.10 for 82.00 with stop below 79.10

On the monthly chart, we have changed our preferred count that an impulsive wave is unfolding with major wave III with circle ended at 79.75, then followed by wave IV with circle and is labeled as a triangle with A: 147.64 (11 August, 1998), B: 101.25, C: 135.20, D: 101.67 and E leg ended at 124.14 to end the wave IV with circle. Hence, wave V with circle is taking place with wave 1 ended at 87.10 earlier this year in January and wave 2 ended at 101.45 and as suggested previously that wave 3 is unfolding and already reached our indicated initial downside target at 79.75 to a fresh record low at 75.94. The quick rebound from there suggest a minor wave iii has possibly ended and correction back to 85.53 would be seen.

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Calm USD/JPY After Friday's Drop

Daily Forex Technicals | Written by ZIFX.com | May 07 12 10:01 GMT

USD/JPY Open 79.77 High 80.40 Low 79.63 Close 79.80

On Friday Dollar/Yen decreased with 65 pips. The currency couple depreciated from 80.40 to 79.73 on Friday, matching the negative Interbank sentiment at nearly -31%, closing the week at 79.80. This morning the Dollar weakened further against the Yen, reaching 79.63.

On the 1 hour chart the downward channel is making renewal attempts, while on the 3 hour chart new downward channel has formed. Break above Friday's top and nearest resistance 80.40 would encourage further recovery of the Dollar. Immediate support is today's bottom at 79.63, and consistent break bellow it could strengthen the Yen further down towards next target 78.76.

There are no major economic events for Japan today.

Quotes are moving in line with the 20 and bellow the 50 EMA on the 1 hour chart, indicating short term neutral and medium term bearish pressure. The value of the RSI indicator is negative and hesitant, MACD is negative and tranquil, while CCI has thinly crossed down the 100 line on the 1 hour chart, giving over all light short signals.

Technical resistance levels: 80.40 82.47 83.30
Technical support levels: 79.63 78.76 77.90

 

ZIFX.com is managed by iFOREX Ltd. and it is in the business of teaching analysis of forex trends, and proposing potential trading signals - not recommendations. All statements and expressions are the opinion of the forex experts at ZIFX.com and are not meant to be either investment advice or a solicitation or recommendation to establish market positions. Our opinions are subject to change without notice. We strongly advise clients to conduct thorough research relevant to decisions and verify facts from various independent sources. The staff at ZIFX.com is not to be held responsible for individual market positions, all trades that clients may take are based on their own final decisions. We do not accept any liability for any loss or damage whatsoever, that may directly or indirectly result from any advice, opinion, information, representation or omission, whether negligent or otherwise, contained in the trading signals or in any accompanying chart analyses, whether communicated by word or message, typed or spoken by any of ZIFX.com employees.

ZIFX.com

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Trade Idea Update: USD/CHF – Buy at 0.9190

USD/CHF - 0.9224

Original strategy : 

Buy at 0.9190, Target: 0.9290, Stop: 0.9155

Position: -
Target:  -
Stop:- 

New strategy  :  

Buy at 0.9190, Target: 0.9290, Stop: 0.9155

Position: -
Target:  -
Stop:- 

Despite Friday’s retreat to 0.9116, as the greenback has rallied after holding above previous support at 0.9115, suggesting the rise from 0.9043 low is still in progress, however, as price has retreated from 0.9272, pullback to 0.9191-93 (intra-day low and current level of the Kijun-Sen) is likely, however, renewed buying interest should emerge there and bring another rise later. A break of said resistance at 0.9272 would extend the aforesaid upmove to 0.9300 but loss of near term momentum should prevent sharp move beyond previous resistance at 0.9335.

In view of this, we are looking to buy dollar on pullback. Below previous resistance at 0.9174 would suggest top is possibly formed and risk test of the Ichimoku cloud top (now at 0.9140) but break of said support at 0.9115 is needed to confirm.

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Greek Election Result Worry Traders

A wave of anti-austerity election results has shifted the market's attention away from the weak US payroll reports and has sent traders in search of safe-havens. France Socialist leader, Francois Hollande defeated President Sarkozy. Frances's new socialist President Hollande has expressed his distaste for the EU fiscal treaty and vowed to hold back France's vote until additional growth measures are included. However, we suspect Hollande will be more realistic with his insistence on changes in the fiscal pact by balancing demands with practical expectations of the bond market. Moving forward, we don't expect the new president to damage their cost of capital and are already hear advisors tone down Hollande rhetoric. On the other hand the situation in Greece is potentially more destablizing. In Greece, the two primary parties which supported the bailouts, failed to win a clear majority. The populist shift away from pro-bailout parties indicates that any new government will need to yield the demand for less significant austerity measures and increase the probability of another Greek default. The IMF quickly cautioned that it may delay Greece's June payment deviated from the current austerity path. The fragmentation of the new Greece government will certainly make implementation of the spending cuts of €3bn already promised by the previous government (along with deep cuts in 2013 & 2014), more difficult. The lack of forward progress will immediately call into question the next tranche of EU /IMF aid. An unnamed IMF source told Reuters 'if there is no agreement on the new cost-cutting, the payments for Greece will be withheld until there is a satisfactory understanding'. Perhaps the only EUR positive news coming from Europe right now was the stronger than expected Factory Orders which jumped m/m to 2.2% vs. 0.5% exp. But in the near term, we expect the single currency to be weighted down by news of Greek coalition building shifting toward anti austerity parties gaining further influence. Risk aversion put commodity currencies on clear back-footing as the AUDUSD tumbled to 1.0110 from 1.0163 and NZDUSD slipped marginally to 0.7907. Oz economic data failed to provide AUD with much support as retail sales printed a strong 0.9% m/m vs. 0.2% exp ( 1.8% q/q vs. 0.5% exp). In addition, building approvals bounced back by 7.4% vs. 3.1 exp vs -8.8% prior, and business confidence crawled up to 4 from 3 prior read. Crude oil remains on offer as WTI fell sharply in the last three days to $95.34 from $105.25 last week as the global economic outlook looks less optimistic.

2012-05-07T00:00:00 GBP UK Public holiday2012-05-07T07:00:00 EUR SP Industrial production % y/y -4.9 exp -5.1 prior2012-05-07T07:15:00 CHF CPI, % 0.2 (-0.9) exp2012-05-07T10:00:00 EUR GE Factory orders, %m/m (y/y) 0.5 (-2.8)exp2012-05-07T16:15:00 IMF MD Lagarde speaks2012-05-07T19:00:00 USD Consumer credit, chg, $ bn 10.0 exp 8.7 prior2012-05-07T23:01:00 GBP BRC shop price index2012-05-07T23:15:00 USD Fed President Lacker

EURUSD spent much of last week oscillating between 1.3122 and 1.3179 levels, but lacked the momentum to really continue its fragile uptrend. Since then European political concerns have returned the a vengeance and the pair has collapsed to a low of 1.2955; negating all near term support and turning our previously bullish bias to bearish. Below us, first support from here is the 1.2955 (intraday low), 1.2930 (25th Jan pivot low), 1.2875 (20th Jan low). Any subsequent rallies are likely to meet sellers back up through 1.3081 (gap high), 1.3122 (2nd May low), 1.3179 (7th May pivot high), 1.3277 (support turned resistance), 1.3341 (3rd April pivot) and key level 1.3385 (27th Mar high).

GBPUSD Much like EURUSD, GBPUSD has receded lower at the start of last week, negating its current uptrend channel and shifting our bias to mildly bearish. The low price for the day was 1.6116 (breaking 1.6155 support), and regardless of the marginal recovery rally this morning, price action suggests further losses may be on the cards this week. If this rally can gather new bids in the coming sessions next resistance is located at 1.6194 (200d ma), 1.6207 (4th May high), 1.6302 (30th May high), 1.6335 ( 31st Aug 11' high), 1.6455 ( 29th Aug 11' high). On the downside, support is located at 1.6078 (25th April low), 1.6014 (19th April reversal low), 1.5970 (17th April reversal top), 1.5804 (5th April low), 1.5771 (22nd Mar low), 1.5754 (16th Mar breakout lvl).

USDJPY US labor data on Friday and political risk emulating form Europe provided the catalyst for a USDJPY to retest the 2-month lows at 79.84 and means we are heading towards potentially ugly confrontation between USDJPY sellers and the Japanese authorities who have made it very clear they don't appreciate yen gains. First supports now come in below us at 79.65 (1st & 7th May lows) then 79.53 (15th Feb low) then 79.11/16 (31st Oct 11 reaction high & Fibo lvl). On the upside it's worth noting next resistance at 80.61 (2nd May high), 81.77 / 88 (failed corrective rally), 82.56 (6th April high), 82.99 (3rd April high), trigger resistance at 83.40 (27th Mar high), 84.18 (15th Mar high & extension target), 84.51 (15th Dec '10 high), then 85.50 (Fibo lvl from 101.00 to 75.60)

USDCHF looks to have bottomed out at 0.9043 at the end of last week, as since that point it's been all one-way traffic heading higher. In the meantime, first support on the downside remains at 0.9043 (2nd May low), 0.9009 (27th Feb high), 0.8955 (11th Nov '11 pivot), then stubborn barrier support at 0.8931 (24th & 29th Feb low). Further rallies are likely to meet sellers back up through 0.9271 (intraday high), 0.9335 (15th Mar high), 0.9381 (23rd Jan high), 0.9413 (19th Jan high), and 0.9497 (18th Jan high).

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EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.3048; (P) 1.3113 (R1) 1.3146; More.....

EUR/USD recovers after dipping to as low as 1.2954 earlier today. But still, intraday bias remains on the downside with 1.3095 minor resistance intact and deeper decline is expected. As noted before, current development suggests that rebound from 1.2625 is already completed at 1.3486. Further fall should be seen to retest 1.2625 low first. Also, fall from 1.4939 is possibly resuming too and break of 1.2625 will target 61.8% projection of 1.4246 to 1.2625 from 1.3486 at 1.2484 next. Though, above 1.3095 will dampen this immediate bearish view and turn bias neutral first.

In the bigger picture, fall from 1.4939 is treated as a falling leg inside the consolidation pattern that started at 1.6039 (2008 high) and current development suggests that it's not finished yet. Break of 1.2625 would likely pave the way to 1.1875 and below as the consolidation extends. Meanwhile, break of 1.3486 resistance should now indicate that the fall from 1.4939 is finished and will turn near term outlook bullish for 1.5 psychological level to continue the long term consolidation.

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Candlesticks and Ichimoku Trade Ideas Performance Update

After seeing the rebound from 1.3095, we ventured long at 1.3130 and although euro did bounce on the release of weaker-than-expected US NFP data, as price faltered just below previous resistance at 1.3180 and dropped sharply on Friday (the position was stopped at 1.3110), then this morning to as low as 1.2956.

A long position was also entered in USD/CHF after seeing the retreat from 0.9174, however, this short position entered at 0.9150 was stopped at 0.9165 as dollar held above previous support 0.9115, dollar opened higher today and surged to as high as 0.9272.

We then entered a long position also on Friday’s post NFP rebound, however, cable faltered below the Ichimoku cloud top and slipped again in late New York, the position entered at 1.6165 was then stopped at 1.6130 as price dropped to as low as 1.6115.

One long position was also entered in USD/JPY at 79.85 and the position is still holding as previous support at 79.64 has held so far.

In short, 4 positions were entered among all 4 currency pairs with total loss of 65 points and the positions are listed below:

 4 May : EUR/USD -  Long at 1.3130, exited at 1.3110    (- 20 points)
4 May : USD/CHF - Short at 0.9150, exited at 0.9165    (- 15 points)
4 May : USD/JPY -  Long at 79.85,
4 May : GBP/USD -  Long at 1.6165, exited at 1.6130    (- 35 points)

                   JPY          EUR           CHF             GBP
Jan              -45         +175          +150            - 5
Feb             + 30         - 75           -105            -85
Mar             -105         +  5           - 75             -60
Apr             +192         -105         -100           -130
May                              -20           -15              -35
Jun        
Jul        
Aug        
Sep        
Oct        
Nov        
Dec                                                                           
Y-T-D         + 72           -20          -145             -315

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Mid-Day Report: Euro Stabilized after Selloff, But Remains Vulnerable

Euro stabilized from initial post election selloff and recovered back above 1.3 against dollar. There was some support to the common currency from Germany's optimism that "close cooperation" will continue between Chancellor Merkel and French President Hollande. Also, Japanese Finance minister Azumi came out and pledged his ready to act if "speculative movements taking advantage of political factors", after today's slide in EUR/JPY. But after all, sentiments on Euro remains fragile as markets are in deep concern of Eurozone's ability to continue austerity and cure the root of the current debt crisis.

Over the weekend, Socialist Francois Hollande won the French election with 52% vote, making him the first socialist candidate to be elected since 1981. That also ended the famous "Merkozy" leadership in Eurozone which pushed for regional wide austerity as they're still struggling with the on-going debt crisis. Hollande pledged to fight austerity after the election and said that "austerity isn't inevitable" and he vowed to give "European construction a growth dimension. The key is now the lower house of parliament election in five weeks. Should Sarkozy's Union keeps its majority, Hollande will find much difficulties to fight austerity.

Meanwhile, the Greek election is also in focus and the situation is more worrisome. Exit polls indicated that the New Democracy and the Socialist Pasok party, the 2 pro-bailout parties, will have at most a 1 seat majority. And indeed, these two main parties could eventually end up falling short of majority in the 300-seat parliament. Coalition of the Radical Left, an anti-bailout party, would claim second place. It's uncertain what government would be formed after the election and how long could the government last. A pressing concern is the new government's attitude to what's agreed for the bailout. Greece needs to detail some EUR 11.5b in fresh spending cuts for next tranche of bailout payment in June. IMF has said that firstly, troika won't visit Greece before new government is formed and ready to finalize the austerity agreed. Secondly has just reiterated that "if there's no agreement on the new cost-cutting, the payments for Greece will be withheld until there is a satisfactory understanding".

Spain prime minister Rajoy said today that the government will pass a decree on May 11 to restore confidence in Spanish banks. While he didn't give any details, Rajoy emphasized that he doesn't prefer a "bad bank" which was being speculated since last week. This is in contrast to what economic ministry said last week, about the creation of a separate entity to take on toxic assets. Rajoy also opened the door to use "public" as the last resort.

Latest data from SNB showed foreign currency reserves were pretty unchanged at CHF 235.6b in April. The data suggests that SNB didn't increase intervention to defend the EUR/CHF floor of 1.2 but SNB could have used other instruments like forwards, currency swaps or three-month contracts. Swiss CPI dropped more than expected by -1.0% yoy in April as deflation worsened. Unemployment rate was unchanged at 3.1% in April.

Other data released today saw Australia building approvals rose 7.4% mom in March, retail sales rose 0.9% mom in March, NAB business confidence rose to 4 in April. Eurozone Sentix investor confidence dropped further to -24.5 in May. German factory orders rose 2.2% mom in March. Canadian building permits rose more than expected by 4.7% mom in March.

Daily Pivots: (S1) 1.3048; (P) 1.3113 (R1) 1.3146; More.....

EUR/USD recovers after dipping to as low as 1.2954 earlier today. But still, intraday bias remains on the downside with 1.3095 minor resistance intact and deeper decline is expected. As noted before, current development suggests that rebound from 1.2625 is already completed at 1.3486. Further fall should be seen to retest 1.2625 low first. Also, fall from 1.4939 is possibly resuming too and break of 1.2625 will target 61.8% projection of 1.4246 to 1.2625 from 1.3486 at 1.2484 next. Though, above 1.3095 will dampen this immediate bearish view and turn bias neutral first.

In the bigger picture, fall from 1.4939 is treated as a falling leg inside the consolidation pattern that started at 1.6039 (2008 high) and current development suggests that it's not finished yet. Break of 1.2625 would likely pave the way to 1.1875 and below as the consolidation extends. Meanwhile, break of 1.3486 resistance should now indicate that the fall from 1.4939 is finished and will turn near term outlook bullish for 1.5 psychological level to continue the long term consolidation.

GMTCcyEventsActualConsensusPreviousRevisedForeign Currency Reserves (CHF) Apr Eurozone Sentix Investor Confidence May

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USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 79.64; (P) 80.01; (R1) 80.24; More...

USD/JPY recovers mildly and is still staying in range above 79.64 support. Intraday bias remains neutral for some more consolidations. Even in case of another recovery, upside is expected to be limited below 81.77 resistance and bring fall resumption finally. Below 79.64 will extend the decline from 84.17 to 61.8% retracement of 76.02 to 84.17 at 79.13 first. Break will pave the way to 75.56/76.02 support zone.

In the bigger picture, 75.56 should be a medium term bottom on bullish convergence condition in weekly MACD. However, the lack of follow through rally and failure below 85.51 resistance argues that the trend hasn't reversed yet. And USD/JPY could merely be in sideway consolidation. In any case, outlook will remain mildly bearish in medium term as long as 85.51 resistance holds and a new low below 75.56 is in favor.

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Trade Idea Update: GBP/USD – Stand aside

GBP/USD - 1.6153

New strategy  : 

Stand aside

Position: -
Target:  -
Stop:-

Although the British pound dropped again after Friday’s decline and hit a low of 1.6115 this morning, as price has rebounded from there in London morning, suggesting consolidation would be seen and recovery to 1.6160-65 cannot be ruled out, however, above the Ichimoku cloud (now at 1.6184-6200) is needed to signal low is formed and bring a test of previous resistance at 1.6210, break there would confirm.

On the downside, below said support would extend recent decline from 1.6304 high for a stronger retracement of recent upmove to 1.6100, however, near term oversold condition should limit downside and support at 1.6082 should remain intact, bring another rebound later. In view of this, would not chase this decline here and we prefer to sell cable on subsequent rebound.

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USD/CHF Mid-Day Outlook

Daily Pivots: (S1) 0.9135; (P) 0.9160; (R1) 0.9204; More....

USD/CHF retreats after jumping to as high as 0.9269 earlier today. But intraday bias remains on the upside for 0.9334 resistance. As noted before, consolidation pattern from 0.9334 is finished and rebound from 0.8930 is resuming. Break of 0.9334 will pave the way back to 0.9594 high. On the downside, below 0.9173 minors support will dampen the immediate bullish view and turn bias neutral again.

In the bigger picture, we're treating rebound from 0.7065 medium term bottom as part of a consolidation pattern. Recent price actions mixed up the outlook and raised the odds for another high above 0.9594 before such rebound completes. But even in that case, upside should be limited by 0.9916 resistance (61.8% retracement of 1.1730 to 0.7065 at 0.9948). Meanwhile, below 0.8930 will revive the case that such rebound is already completed. Further break of 0.8567 will confirm the bearish case and should at least push USD/CHF lower for 61.8% retracement of 0.7065 to 0.9594 at 0.8031 and below.

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Trade Idea Update: USD/JPY – Hold long entered at 79.85

USD/JPY – 79.79

Original strategy : 

Bought at 79.85, Target: 80.95, Stop: 79.50

Position: - Long at 79.85
Target:  - 80.95
Stop:- 79.50

New Strategy  :   

Hold long entered at 79.85, Target: 80.95, Stop: 79.50

Position: - Long at 79.85
Target:  - 80.95
Stop:- 79.50

Although dollar dropped initially to 79.64 again, as dollar has rebounded after holding at this level, suggesting further consolidation would be seen and another corrective bounce to the Ichimoku cloud (now at 80.28-34) would be seen, however, break of resistance at 80.61 is needed to signal low is formed and bring retracement of recent decline to previous support at 80.86 and possibly towards 81.00.

In view of this, we are holding on to our long position entered at 79.85. A break of said support would abort and extend recent decline to 79.50, however, loss of downward momentum should prevent sharp fall below 79.20/25 and still reckon 79.00 would hold from here and risk from there remains for another bounce.

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Trade Idea Update: GBP/USD – Stand aside

GBP/USD - 1.6153

New strategy  : 

Stand aside

Position: -
Target:  -
Stop:-

Although the British pound dropped again after Friday’s decline and hit a low of 1.6115 this morning, as price has rebounded from there in London morning, suggesting consolidation would be seen and recovery to 1.6160-65 cannot be ruled out, however, above the Ichimoku cloud (now at 1.6184-6200) is needed to signal low is formed and bring a test of previous resistance at 1.6210, break there would confirm.

On the downside, below said support would extend recent decline from 1.6304 high for a stronger retracement of recent upmove to 1.6100, however, near term oversold condition should limit downside and support at 1.6082 should remain intact, bring another rebound later. In view of this, would not chase this decline here and we prefer to sell cable on subsequent rebound.

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Trade Idea Update: USD/JPY – Hold long entered at 79.85

USD/JPY – 79.79

Original strategy : 

Bought at 79.85, Target: 80.95, Stop: 79.50

Position: - Long at 79.85
Target:  - 80.95
Stop:- 79.50

New Strategy  :   

Hold long entered at 79.85, Target: 80.95, Stop: 79.50

Position: - Long at 79.85
Target:  - 80.95
Stop:- 79.50

Although dollar dropped initially to 79.64 again, as dollar has rebounded after holding at this level, suggesting further consolidation would be seen and another corrective bounce to the Ichimoku cloud (now at 80.28-34) would be seen, however, break of resistance at 80.61 is needed to signal low is formed and bring retracement of recent decline to previous support at 80.86 and possibly towards 81.00.

In view of this, we are holding on to our long position entered at 79.85. A break of said support would abort and extend recent decline to 79.50, however, loss of downward momentum should prevent sharp fall below 79.20/25 and still reckon 79.00 would hold from here and risk from there remains for another bounce.

View the original article here