Current Positions:
- Short AUDUSD from 1.0490, Stop at 1.0530, Target 1 at 1.0400
- Long EURCHF from 1.2018, Stop at 1.1990, Target 1 at 1.2500, Target 2 at 1.2750
- Long USDJPY from 77.92 (added), Stop at 77.60, Target 1 at 79.60, Target 2 at 80.60/65
Pending Positions:
- Short GBPUSD from 1.6120/40 (missed entry on Wednesday)
- Pending Long USDJPY daily close >80.65
- AUDUSD: The AUDUSD has pared back its gains today, working on an Inside Day with the potential for a false break out on the horizon. The pair is currently sitting at immediate near-term support at 1.0435/45 (mid-July and early-August swings), with additional support come in at1.0380/1.0400 and 1.0320/25 (200-DMA, early-July swing highs). In the short-term, there are two key levels to the upside: 1.0530/45 (former highs in July and August) and 1.0560/70 (descending trendline resistance off of the February 29 and August 9 highs). Bias: bearish.
- EURUSD: Nothing has changed: “The EURUSD made a huge technical breakthrough on Friday by shattering a yearlong descending trendline off of the August 2011 and October 2011 highs. This now marks the potential for a long-term bottom at the 1.2040/45 low. Additionally, while our bias for a move towards 1.1500 by November 1 is negated, a weekly close back within the channel – back below 1.2620/35 (former yearly low set in January) – would suggest a false breakout has occurred.” Near-term resistance comes in at 1.2930/35 (61.8% Fibonacci retracement on February high to July low) and 1.2980/1.3000. Support comes in at 1.2820/25 (late-May swing highs), 1.2740/50, 1.2620/35, 1.2500/10, and 1.2460/80. Bias: bullish.
- GBPUSD: I’ve maintained: “As long as price on the daily chart is supported by 1.5930/40, there’s reason to believe that a run up to 1.6120/40 is possible during September.” Yesterday, the GBPUSD rallied into 1.61020/40 and has reversed, suggesting a near-term top may be in place now that the short-term trend is conflicting with major resistance in the longer-term trend. Should 1.6120/40 break, the former April swing highs at 1.6260 (by close), 1.6300 (by high) are in focus; this would also represent a break of the descending trendline off of the April 2011 and August 2011 highs. Below 1.5930/40, near-term support comes in at 1.5860/75 (ascending trendline off of August 2 and August 31 lows), 1.5770/85 (late-August swing lows), and 1.5700. Bias: bullish above 1.5930/40.
- USDJPY: The June 1 swing low at 77.65/70 is being tested currently but without a daily close below said level, we believe there is scope for a rebound. It is unlikely that such an event will occur barring a significant fundamental catalyst: the Federal Reserve announces a major outright bond-buying program. We’ve been suggesting that “penetration of the August low at 77.90 will likely result in a washout to new lows with the potential for 77.65/70 and 77.30.” While this has begun, we remain cautious for the rest of the day with the FOMC on deck. A move back above 77.90 exposes 78.10/20, 78.60, and 79.10/30 (100-DMA, 200-DMA, descending trendline off of the April 20 and June 25 highs). Bias: neutral.
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--- Written by Christopher Vecchio, Currency Analyst
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