The European bank stress tests turned out to be a non-event and although the EUR/USD saw support on a brief relief rally uncertainty over future growth has left the pair directionless. The upcoming US GDP could potentially be a trigger for volatility but markets will have to wait until Friday for the growth report. The euro/dollar is up against formidable resistance which increases the chances of continued consolidation making it a potential scalping target.
Key Technical Levels
Short-term Range Offers Target Levels
Charts created using Strategy Trader– Prepared by John Rivera
The EUR/USD is finding resistance at the 61.8% Fibo of 1.3690-1.18754which has slowed its current rally. A RSI at 70.00 tells us the pair is on the verge of being oversold and adds to the case that we could be seeing bullish conviction wavering. Therefore, until markets find a bearish catalyst, further consolidation may be expected. The pair is carving out a tight short-term range between 1.2950and 1.3050 which is providing target levels for entering and exiting positions.
Fibo Resistance Has Slowed Gains
Charts created using Strategy Trader– Prepared by John Rivera
Key Support/ResistanceLevels to Watch
|
Pair |
S/R |
Level |
Spot |
Valid Since |
Market Influence |
|
AUD/USD |
Support |
100-Day SMA |
0.8864 |
07/22/10 |
Low |
|
EUR/USD |
Resistance |
61.8% Fibo of 1.3690-1.18754 |
1.3000 |
05/04/10 |
Moderate |
|
USD/CHF |
Resistance |
200-Day SMA |
1.0644 |
07/01/10 |
Moderate |
Quantitative Metrics
The EUR/USD has seen its ATR steadily decline as the pair’s Bullish momentum has slowed upon the test of formidable resistance. At 139 pips daily volatility remains in the middle of the most traded pairs, but only accounting for 1.07% of the spot price increases its attractiveness. The current uptrend has led to a widening of the Bollinger band width to 809 pips which is the highest level of variance amongst the majors and a definite red flag for high frequency traders. One week implied volatility readings have decline across the board which is a sign that fears are easing and that could limit breakout potential.
A Widening Bollinger Band and Declining ATR Gives Mixed Signals
Charts created using Strategy Trader– Prepared by John Rivera
Volatility / Activity Indicators
|
EURUSD |
GBPUSD |
USDJPY |
USDCHF |
USDCAD |
AUDUSD |
NZDUSD |
GBPJPY |
EURJPY |
|
|
ATR(14) |
0.0139 |
0.0158 |
0.8361 |
0.0111 |
0.0127 |
0.0131 |
0.0108 |
1.9228 |
1.6000 |
|
ATR% |
1.07% |
1.01% |
0.96% |
1.05% |
1.23% |
1.46% |
1.48% |
1.41% |
1.41% |
|
20-5 Day SMA |
-0.0209 |
-0.0225 |
0.3491 |
0.0029 |
0.0098 |
-0.0235 |
-0.0177 |
-1.4348 |
-1.3870 |
|
Boll. Band Width |
0.0809 |
0.0705 |
2.6094 |
0.0313 |
0.0465 |
0.0809 |
0.0626 |
5.7328 |
5.8907 |
|
1 wk Implied Vol |
10.3150 |
9.6100 |
10.3450 |
9.0100 |
10.0225 |
13.9200 |
14.7600 |
14.4675 |
14.3750 |
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To discuss this report or be added to the email list, contact John Rivera, Currency Analyst: jrivera@fxcm.com
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