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Daily Observations: October 8, 2012

Daily Observations: October 8, 2012

Christopher Vecchio, CFA, Senior Strategist

Current Positions:

- Long AUDUSD from 1.0185, Stop at 1.0145, Target 1 at 1.0240/50, Target 2 at 1.0340/50

- Long NZDUSD from 0.8195, Stop at 0.8170, Target 1 at 0.8300 (will trail)

- Long EURCHF from 1.2018, Stop at 1.1990, Target 1 at 1.2500, Target 2 at 1.2750

Pending Positions:

- Pending Long USDJPY daily close >80.65

Closing Positions:

- Closed Short USDJPY from 76.62 at 76.22 for +40-pips.

- AUDUSD:The pair remains lower after running into support turned resistance, at 1.0255/75 on Friday, the descending trendline off of the September 12, September 20, and September 26 lows. However, the AUDUSD remains supported by the crucial 1.0160/75 level, swing lows in mid-July and early-September. Resistance comes in at 1.0245/50 (100-DMA), 1.0255/75, 1.0330, 1.0405/25 (mid-August swing lows), and 1.0470/85 (former intraday swing levels). Support comes in at 1.0160/75 (mid-July and early-September swing levels), 1.0100/10, and 1.0000. Bias: bullish above 1.0150/65.

- EURUSD: The late sell-off Friday has spilled over to Monday, with a potential Evening Start candlestick cluster forming on the daily chart; this would negate our near-term bullish bias. However, considering that the EURUSD remains range bound still within prices we’ve seen over the past two-weeks, our key levels remain the same. Resistance comes in at 1.3300, 1.3070/75 (October high), 1.3145, and 1.3165/75 (September high). Support comes in at 1.2930/35 (61.8% Fibo on February 2012 high to July 2012 low), 1.2895/1.2900 (20-EMA), and 1.2820/30 (200-DMA, late-April swing high). Bias: bullish above 1.2830.

- GBPUSD: Price continues to decline and the initial bounce off of the ascending trendline off of August 2 and August 31 lows has faded. Also, with price back below the 20-EMA and the descending trendline off of April 2011 and August 2011 highs (confluence at 1.6100/20), there now appears to be a slight descending channel off of the September 21 high in place. We will respect this as our guide for the coming days. Support comes in at 1.5970/75 (former channel resistance off of June 20 and August 23 highs), and 1.5770/85 (late-August swing lows. Resistance comes in at 1.6100/20, 1.6135, 1.6260 (the former April swing highs by close) and 1.6300 /10 (September high). Bias: bullish above 1.6100/20.

- USDJPY:Although price breached the 78.40/60 zone, overhead resistance at 78.80/90 (100-DMA, descending trendline off of the April 20 and June 25 highs) proved too great to overcome. Thus, the downtrend from April remains. With the USDJPY holding near 78.10/20, this is the bull/bear line: a hold above gives scope for a rebound to 78.40/60, whereas a close below opens up room for a move towards 77.90, 77.65/70 (June 1 low), 77.40/45 (September 28 low), and 77.10/15 (September low). Bias: bearish below 78.80/90.

- SPX500: Reversal on Friday resulted in a failed run at the yearly highs, and the Doji offered followed by some further downside suggests near-term price action may be biased lower. I reiterate though “Since early-August, the 20-EMA has been strong support, with no two consecutive closes below occurring. We also note that over this time frame the daily RSI has not moved below 50.” Resistance comes in at 1458/60, 1475, and 1498/1504. Support comes in at 1445/47(20-EMA), 1425 (the 61.8% Fibo retracement on June 2012 low to September 2012 high), and 1423/25 (50-EMA). Bias: bullish above 1445/47.

- GOLD: Another rejection at the crucial 1785/1805 resistance zone prompted by Friday’s NFPs has dragged Gold back to key support: the sharp ascending trendline off of the August 15 and August 31 lows. This comes in today at 1755/60, reinforced by the 20-EMA, and former intraday swing lows throughout mid-September. If this support breaks, 1750/55 is the next swing level lower to watch for. Resistance comes in at 1785/1805 and 1840. Bias: bullish above 1750/55.

Any other trade ideas and general macroeconomic musings can be found in the Real Time Newsfeed, or by following me on twitter @CVecchioFX.

--- Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail

Follow him on Twitter at @CVecchioFX

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