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Dollar Sets New Trend Against Majors

By Sam Shenker
03 May 2005 07:44 GMT

 Euro bulls continue to rely on a minor support at 1.2787, an Apr 5 minor wing low, for the first line of defense. An intermediate support at 1.2730, a 2005 low, continues to defend the major support at 1.2657,a Nov 11 Daily spike low.  A loss for the euro bulls might see the pair change its overall trend, with dollar bulls dominating the direction the EUR/USD will take in the upcoming months as a break below the 1.2730-1.2657, will most likely see the pair retest the bids at 1.2481, a 61.8 Fib of the 1.1760-1.3667 euro rally, with a further breakdown targeting the 1.2000, a summer range low.  In case the euro bulls manage to advance against the greenback, they will encounter a minor resistance at 1.2992, a 78.6 Fib of the 1.2730-1.3481euro rally. A move deeper into the dollar held territory will come upon an intermediate resistance at 1.2944, a 20-day SMA, with a further advance meeting major resistance at 1.3018, a 61.8 Fib of the Feb-Mar euro bull swing. Oscillators remain mixed, with Stochastic neutral on the daily chart at 47.35 and extremely oversold at 4.07 on the dealer (4HR) chart. RSI remains neutral on both the daily chart at 36.39 and at 35.83 on the 4-hour chart. MACD followed through with a bearish crossover below the zero line on both the daily dealer (4HR) charts. 

Key levels


USD/JPY - Yen longs and dollar bulls continued to battle with neither side having a clear advantage. As the trading range begins to shrink, battle lines are drawn and the defenses being established by the both sides. As the dollar continues to recapture some of its previously lost territory, the vanguard greenback bulls will encounter a minor resistance at 105.53, a 5-day SMA. A move deeper into the yen held territory will encounter an intermediate resistance at 105.93, a 10-day SMA. A major resistance at 106.56, an Apr 20 daily spike low, remains a key target for the dollar bulls as the a breakout above will most likely see the pair retest the 108.88, a 2005 high and a gateway to the key psychological level at 110.00. In case the yen bulls manage to push back the dollar longs, greenback bulls will rely on a minor support at 104.58, an Apr 28 daily low. An intermediate support at 104.41, a 61.8 Fib of the Jan-Apr dollar rally, continues to protect the major support at 104.04, a Feb 28 daily spike low. Indicators are mixed, with Stochastic remaining oversold on the daily chart at 14.99 and neutral at 56.34 on the dealer (4HR) chart. RSI is treading above the oversold level on the daily chart at 34.31 and is neutral at 45.53 on the 4-hour chart. MACD continues to slope down toward the zero line on the daily chart and made a bearish crossover on the dealer (4HR) chart.   
   
Key levels


GBP/USD - Pound defenses crumbled under the onslaught of the marauding dollar bulls with the pair continuing to establish new daily lows. As the dollar continues to unravel cable defenses, sterling bulls redeployed their defenses with Fibonacci levels providing all three layers of support. Currently minor support is seen at 1.8905, a 50.0 Fib of the Mar-Apr cable bull swing, with intermediate support at 1.8830, a 61.8 Fib of the 1.8591-1.9219 sterling rally. A major support at 1.8725, a key 78.6 fib of the Mar-Apr pound rally, is a key target for the dollar bulls, as it defends 1.8505, a 2005 low and a gateway to the 1.8414, a 61.8 Fib of the 1.7710-1.9552 cable rally. In case sterling longs regain their footing and push the dollar back, they will encounter a minor resistance at 1.8979, a 38.2 fib of the 1.8591-1.9219 pound rally. An intermediate resistance can be found at 1.9039, a 5-day SMA, with major resistance at 1.9070, 23.6 Fib of the Mar-Apr pound bull swing currently defending the 1.9100 figure from the counter attack by the cable longs. Indicators are mixed. Stochastic is slopping downward below the overbought line on the daily chart at 68.04 and is approaching an extremely oversold at 7.03 on the dealer (4HR) chart. RSI remains neutral on both the daily chart at 45.58 and on the 4-hour chart at 33.28. MACD made a bearish crossover above the zero line on the daily chart and is dipping below the zero line on the dealer chart.         

Key levels


USD/CHF - Swissie remained neutral as the price action slowed to a crawl, following last weeks intense clash with dollar longs the over the key 1.1800 level. As the Swiss Franc and the greenback continue to oppose each other, the key defensive positions remain intact as the pair made little progress in either direction. Advancing dollar longs will encounter a minor resistance at 1.2028, a 23.6 Fib of the 1.1475-1.2198 greenback rally. An intermediate resistance at 1.2113, an Apr 8 minor swing high, remains a second line of defense before the dollar can reach the 1.2146, a major resistance created by the Apr 5 minor swing high. A breakout will target the 1.2262, a 2005 high, with a subsequent breakout targeting the psychologically important level at 1.2500.. Dollar longs have further tightened their defenses to keep up with pace of their advance. A minor support remains at 1.1921, a 38.2 Fib of the Mar-Apr dollar rally, with intermediate support remaining intact at 1.1837, a 50.0 Fib of the Mar-Apr dollar bull swing. A major support at 1.1751, a 61.8 fib of the 1.1475-1.2198 dollar rally continues to defend the greenback held territory against a countermove by the Swissie bulls. Oscillators are mixed. Stochastic is slopping upward above the oversold line on the daily chart at 36.32 and remains extremely overbought at 92.61 on the dealer (4HR) chart. RSI remains neutral on both the daily chart at 58.08 and on the 4-hour chart at 62.25. MACD made a bullish crossover at the zero line on the daily chart and continues to tread above the zero line on the dealer chart.                  

Key level




Technical Overview



Chart of the Day - EUR/JPY

5/03
EURAUD broke below the consolidation range that confined the cross since the beginning of March. As the synthetic head lower the EuroAussie will most likely find support at 1.6117, a 78.6 fib of the 1.5721-1.7826 euro rally. A further breakdown will most likely see the cross test the bids at 1.5721, a 2004 low and beginning of the 2100 pip rally. Indicators are pointing to the range bound conditions. Stochastic is approaching oversold line at 27.88. ATR is falling, indicative of a drop in volatility, following a breakdown of the consolidation range. ADX(DMI) is well below 25, at 14.55, indicating a lack of a significant trend.

4/08
EURAUD continues to consolidate within a wedge pattern with a potential breakdown (currently favored) that may carry the cross toward a major support at 1.6363. A further breakdown might the EuroAussie retest the bid around 1.6160, expanding triangles lower boundary. Indicators are pointing to pre-breakout conditions, with Stochastic neutral at 35.18. ATR is low, indicating a drop in volatility and a contracting range. ADX(DMI) is at 11, showing trendless conditions, with DI+ crossing above the DI- issuing a buy signal.

 

Technical Levels - London/New York

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03 May 2005 07:44 GMT