Action Insight | Written by ActionForex.com | Jan 19 07 15:23 GMT |
Forex Mid-Day Technical Report Dollar Firmer but Still in Range
Dollar is mildly firmer in US session after better than expected preliminary University of Michigan sentiments which rose to 98 in Jan, from 91.7, above consensus of 92.5. However, generally speaking dollar is still bounded in tight range against majors without much progress. Richmond Fed Lacker and Kansas City Fed Hoenig will speak on economic outlook today and may catch some attentions from the market.
Earlier today, Dec UK retail sales cam in better than expected by growing 1.1% mom, 3.7% yoy versus expectation of 0.5% and 3.2%. But sterling’s reaction was muted as consolidation continued. EUR/USD
Daily Pivots: (S1) 1.2912; (P) 1.2944; (R1) 1.2994; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/
EUR/USD’s corrective recovery from 1.2867 has reached 1.2998 but still limited by 1.3 psychological resistance. At this point, even though further recovery cannot be ruled out as long as EUR/USD stays above 1.2896 support, we’d still expect upside to be limited by 1.3052 cluster resistance (38.2% retracement of 1.3364 to 1.2867 at 1.3057) and bring decline resumption.
On the downside, below 1.2896 minor support will indicate the recovery has likely completed and should bring retest of 1.2867 low. Break will confirm fall from 1.3296 has resumed for next downside target of 1.2760 support.
In the bigger picture, with a break of 1.2922 cluster support (50% retracement of 1.2483 to 1.3362 at 1.2923), and bearish divergence condition in weekly MACD, a medium term top could be already in place a 1.3364. Sustained break of 1.2760 will have 161.8% projection of 1.3364 to 1.3051 from 1.3296 at 1.2790 and possibly medium term rising channel line (now at 1.2718) taken out. This will add much weight to the case that whole medium term up trend from 1.1639 has completed. Focus will then be on 1.2483 cluster support (50% retracement of 1.1639 to 1.3364 at 1.2502). Decisive break of this cluster support will confirm this case and have medium term outlook turned bearish.
On the upside, a break of 1.3052 cluster resistance will indicate the fall from 1.3364 has possibly completed after drawing support from resistance line (1.2978 to 1.2937, now at 1.2859). Focus is turned back to 1.3296 resistance but a break of 1.3364 is needed to indicate rise from 1.2483 has resumed. Otherwise, medium term outlook is, at best, neutral.
GBP/USD
Daily Pivots: (S1) 1.9658; (P) 1.9718; (R1) 1.9801; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/
Cable’s tested 1.9777 resistance again but failed to break through this resistance so far. As discussed before, the deep retreat from 1.9777 with mild bearish divergence condition in 4 hours MACD and RSI suggest a short term top is formed at 1.9777 and further consolidation is in favor to follow. As long as cable stays below 1.9777 resistance, risk remains for another pull back towards 1.9587 cluster resistance (38.2% retracement of 1.9261 to 1.9777 at 1.9580. However, we’d expect downside to be contained above 1.9452 cluster support (61.8% retracement of 1.9261 to 1.9777 at 1.9458) and bring rally resumption.
On the upside, above 1.9777 again will indicate rally from 1.9261 has already resumed for next upside target of 1.9846 high and then 138.2% projection of 1.8090 to 1.9142 from 1.8517 at 1.9917.
In the bigger picture, correction from 1.9846 has completed after three waves down to 1.9261. Break of 1.9846 high will confirm that rally from 1.8517 has resumed. However, close attention will be paid to sign of loss of upside momentum and reversal pattern formation as cable approaches key cluster resistance of 2.0106 (1992 high, 100% projection of 17047 to 1.9024 from 1.8090 at 2.0067). On the downside, it will take a break below 1.9452 support to indicate argue that the whole rise from 1.9261 has completed and shift short term focus back to the downside.
USD/CHF
Daily Pivots: (S1) 1.2416; (P) 1.2481; (R1) 1.2532; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/.
USD/CHF’s retreat from 1.2546 was contained above 1.2427 support and USD/CHF continues to struggle in tight range around 1.2501 projection level. Though, at this point, further rise is still in favor as long as USD/CHF stays above 1.2427 support. Next upside target will be 161.8% projection of 1.1878 to 1.2268 from 1.2111 at 1.2742.
However, upside momentum remains unconvincing at this moment with 4 hours MACD staying below signal line. Below 1.2427 support will suggest a short term top is formed and encourage further pull back to 38.2% retracement of 1.2111 to 1.2544 at 1.2379. But downside should be contained by 1.2270 cluster support (61.8% retracement of 1.2111 to 1.2544 at 1.2276) and bring further rally
In the bigger picture, previous break of 1.2343 resistance has opened up a few possibilities. Decisive break of 1.2501 projection level will start to argue the rise from 1.1878 is of impulsive nature. In other words, the whole down trend from 1.3283 could have completed and the current rise from 1.1878 could be a resumption of the medium term rebound from 1.1288 to 1.3283. Further rally should be seen to 1.2768 resistance first. But still, a strong break of 1.2768 cluster resistance is needed to confirm such case. Otherwise, USD/CHF will just be bounded in choppy range trading between 1.1878 and 1.2768.
Meanwhile, on the downside, a sustained break of 1.2270 cluster support will suggest that the whole rebound from 1.1878 has possibly completed and put focus back to 1.2110 support. Break will shift focus back to the downside for 1.1878 low.
USD/JPY
Daily Pivots: (S1) 120.59; (P) 121.08; (R1) 121.70; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/
USD/JPY continues to struggle in tight range around 121.38 resistance (05 high). As discussed before, from a short term point of view, further rally is still expected to follow as long as USD/JPY stays above 120.45 support. Next upside target will be 100% projection of 114.41 to 119.68 from 117.96 at 123.23
However, failure to sustain above 121.38 and a pull back to below 120.45 support will indicate a short term top is possibly formed with bearish divergence condition in 4 hours MACD and RSI. In such case, further pull back should be seen towards 4 hours 55 EMA (now at 120.36). But downside should be contained by 119.68 and bring rally resumption. Break of 119.68 is needed to shift short term focus to the downside.
In the bigger picture, sustained break of 119.86 resistance confirmed that whole rally from 108.99 has resumed for 121.38 resistance As discussed before, fall from 121.38 to 108.99, with its three wave nature, should either represent the correction to whole year long up trend from 101.65 to 121.38, or part of such correction. That is, the medium term rally from 108.99 is either resumption of the whole up trend from 101.65 or a rising leg of consolidation pattern that started at 121.38. Favor is still in the former case as long as USD/JPY stays above 114.41 support or before sign of reversal.
Also, note that the current rally has pushed USD/JPY above multi-year falling trend line (147.68 to 135.20, now at 117.65) again. Sustained break of 121.38 resistance will confirm that whole up trend from 101.65 has resumed.
Forex News Digest
http://c.moreover.com/click/here.pl?r775161118
Fri, 19 Jan 2007 13:34:00 GMT from Bloomberg
http://c.moreover.com/click/here.pl?r775154981
Fri, 19 Jan 2007 13:28:00 GMT from Reuters
http://c.moreover.com/click/here.pl?r775097777
Fri, 19 Jan 2007 12:34:00 GMT from Washington Post
http://c.moreover.com/click/here.pl?r775092134
Fri, 19 Jan 2007 12:29:00 GMT from Bloomberg
http://c.moreover.com/click/here.pl?r775038476
Fri, 19 Jan 2007 11:43:00 GMT from Bloomberg
http://c.moreover.com/click/here.pl?r775014180
Fri, 19 Jan 2007 11:20:00 GMT from Servihoo.com
http://c.moreover.com/click/here.pl?r774981648
Fri, 19 Jan 2007 10:49:00 GMT from Bloomberg
http://www.actionforex.com/latest_news/latest_news/forex_news_20060323537/ Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
00:30 AUD Australia Export price index Q/Q Q4 0.20% 1.00% 1.90%
00:30 AUD Australia Import price index Q/Q Q4 -3.20% -1.70% -0.30%
09:30 GBP U.K. PSNCR M/M Dec 13.36B 15.1 B 7.11 B
09:30 GBP U.K. Retail sales M/M Dec 1.10% 0.50% 0.30% 0.20%
09:30 GBP U.K. Retail sales Y/Y Dec 3.70% 3.20% 3.20% 3.10%
13:30 CAD Canada Wholesale sales M/M Nov 0.10% 0.60% -0.20% -0.20%
15:00 USD U.S. U. of Michigan survey Jan 98.0 92.5 91.7
http://www.actionforex.com/general_information/forex_newsletters/forex_newsletter_200507301487/