Daily Classical: Late Monday Price Action Encouraging for Equities

EUR/USD – Price action looking more constructive on Monday following the heavy setbacks seen in the previous week. While the pair did break back below the 1.2765 previous range lows, the market has been unable to establish itself below the latter suggesting yet another topside break on the horizon. A close at or near daily opening levels by 1.2815 would increase the probability for a short-term reversal. Back below 1.2705 negates. Strategy: BUY @ 1.2910 FOR A 1.3330 OBJECTIVE, STOP @1.2690.

USD/JPY – Market remains locked in some bearish sideways consolidation with the latest setbacks damaging prospects for major base and double bottom. However, setbacks have been well propped intraday and the pair looks set for a close back by opening levels which could warn of fresh upside over the coming days. The key short-term levels to watch above and below come in by 90.70 and 88.90 and a break above or below will be required for clear directional bias. We maintain a mild bull bias and as such will retain our long position. Position: LONG @ 89.65 FOR A 92.95 OBJECTIVE, STOP @88.70.

GBP/USD – The market has reversed course on Monday with the pair putting in a bearish reversal day following the break below 1.4185. The latest recovery has stalled out by 1.4545 and look for a lower top to now take form by the latter to be confirmed on a break back below 1.3500. We do not however rule out the potential for a base still in place at 1.3500 and with daily studies in neutral territory, we prefer to stand aside now and await a clearer signal. Key levels to watch above and below now come in by 1.4545 and 1.4055 respectively. Strategy: SIDELINED; AWAIT CLEARER SIGNAL.

USD/CHF – The latest dips have been well supported ahead of the previous breakout zone by 1.1300. The pair now appears to be locked in an up-trend off of the late December 1.0370 lows and look for a fresh higher low to be in place by 1.1315 ahead of the next upside extension beyond 1.1715. This will unlock a challenge of the more significant trend high at 1.2300 (21Nov high). Back under 1.1315 negates and puts focus back on downside. Strategy: BUY@ 1.1720 FOR A 1.2300 OBJECTIVE, STOP @1.1490.

USD/CAD – The market remains confined to a choppy range trade with the price recently failing by loose falling trend-line resistance at 1.2765 (21Jan high). Look to continue to play the triangle high-lows until a meaningful break has been achieved. The overall structure is bullish and as such establishing a long position on a dip to triangle support should prove to be rewarding.   Strategy: BUY@ 1.1920 FOR A 1.3020 OBJECTIVE, STOP @1.1740.

AUD/USD – Monday's setbacks have stalled out by 0.6250 which also loosely coincides with the key 78.6% fib retracement off of the 0.6005-0.7270 move and rising trend-line support off of the 0.6005 trend lows. With daily studies showing the need for a corrective rebound and the market now looking to trade back towards daily opening levels at 0.6355, we will look for an opportunity to play the long side into Tuesday if given the chance. Only back under 0.6250 negates. Strategy: BUY@ 0.6390 FOR A 0.6735 OBJECTIVE, STOP @0.6240.

NZD/USD – The market finally managed to take out critical psychological barriers at 0.5000 today, extending to 0.4960 ahead of the latest minor bounce. However, daily studies are well oversold and show the need for a minor corrective bounce at a minimum before even considering a resumption of the broader downtrend. A potential hammer has now taken form on the daily chart and we will look for a close at or near opening levels by 0.5090 to set up a short-term base. Confirmation of base will be given Tuesday on a break above Monday's 0.5095 high. Strategy: BUY@ 0.5100 FOR A 0.5380 OBJECTIVE, STOP @0.4940.