Techs – The cross has finally broken above key neckline resistance at 1.5145 today to confirm an inverse head & shoulders basing pattern. The market had been building a base below the latter since December 2008 and the upside break projects a more significant move over the medium-term back towards the 1.5600 area which coincides with the 78.6% fib retracement off of the 1.5885-1.4650 move. Inability for the cross to extend setbacks after basing out by 1.4650 in mid-January also reaffirms newly adopted bullish outlook with the price stalling just ahead of the October historic lows at 1.4300. Daily studies are starting to look a little stretched so we would be more inclined to look to buy into dips. Strategy: BUY @ 1.5000 FOR A 1.5410 OBJECTIVE, STOP @1.4875.
Fundamental Catalyst – The Swissy has come under some pressure of late with the currency suffering at the hands of threats of intervention from the central bank along with weaker domestic data. While SNB Roth has assured the markets that the Swiss economy is in good shape relatively, this morning’s KOF print falling to a record low -0.87 (expected -0.45) seems to leave enough reason for concern. The cross rate has also always been very well correlated with risk appetite and global equity performance. Today’s stronger global equity performance has also no doubt been a large driver of the buy-stop triggers through 1.5150.
Written by Joel Kruger, Technical Currency Analyst for DailyFX.com
To contact the author of this report, e-mail jskruger@fxcm.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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