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Daily Classical: EUR/USD Could Be Attempting to Carve Double Bottom

Tuesday, 03 February 2009 17:35:15 GMT  |  Joel Kruger, Technical Currency Analyst

Euro Showing Potential for Double Bottom. Dollar/Yen Going Nowhere Fast. British Pound Price Action Shows Inside Day. Dollar/Swiss Potential for Double Top. Dollar/Cad Nearing Triangle Apex. Australian Dollar Bouncing by Trend-Line Support. New Zealand Dollar Bullish Reversal Day.

 

 

EUR/USD – Monday's bullish close has indeed shown good follow through on Tuesday with the market easily breaking back above 1.2900 (2Feb high) and accelerating through 1.3000 barriers. Although the recent lows by 1.2705 were slightly lower than the 1.2765 (23Jan lows) lows, a potential double bottom is now taking form with the neckline coming in at 1.3330 (27Jan high). Look for a challenge of the neckline over the coming days with a break to likely open more significant gains back towards a measured move objective of 1.3950 which also coincides with the 78.6% fib retracement off of the major 1.4720-1.2705 move. Only back under 1.2705 negates. Strategy: Position: LONG @ 1.2910 FOR A 1.3330 OBJECTIVE, REVISED STOP @1.2790.

 

USD/JPY – Market remains locked in some bearish sideways consolidation with the latest setbacks damaging prospects for major base and double bottom. However, setbacks remain well propped intraday ahead of 88.00 to keep basing prospects intact. The key short-term levels to watch above and below come in by 90.70 and 88.00 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 – Monday's bearish reversal has lacked follow through with the market trading marginally higher after stalling well shy of the 1.4055 lows. Nevertheless, the inside day price action leaves us on the sidelines with a break above 1.4545 or back below 1.4055 required to establish a clear directional bias. Broader market price action on Tuesday would however suggest that we could be in the process of carving a fresh higher low by 1.4055 ahead of next upside beyond 1.4545. Strategy: SIDELINED; AWAIT CLEARER SIGNAL.

 

USD/CHF – The market is in the process of rolling over after failing to take out the 1.1715 highs from 23Jan. This now sets ups a potential double top on the daily chart with a break back below the neckline at 1.1315 to confirm and accelerate setbacks towards a measured move objective of 1.0915. Daily stochastics show a negative divergence and confirm the likelihood of an intermediate bout of selling. Only back above 1.1715 negates. Strategy: SELL@ 1.1395 FOR A 1.0915 OBJECTIVE, STOP @1.1725.

 

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: Strategy: BUY@ 1.1900 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. This has opened Tuesday's bullish reversal day and likely signals additional gains over the coming days. Inter-day studies confirm the need for corrective action and we look for a return towards 0.6735 before considering the possibility of bear trend resumption. Only back under 0.6250 negates. Position: LONG@ 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, extending to 0.4960 on Monday 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. Monday's hammer has now been confirmed with a bullish reversal day ending a string of consecutive lower lows and lower highs. Look for fresh upside over the coming days back towards 0.5380 before the possibility of broader bear resumption. Strategy: Position: LONG@ 0.5100 FOR A 0.5380 OBJECTIVE, STOP @0.4940.

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