Short EURUSD, NZDJPY Against the Highs- Counter-trend Scalps in Play
EURUSD- The break of the US opening range low at 1.3283 early in the session put a bearish intra-day bias on the pair with initial downside targets eyed at 1.3250 and 1.3220. We booked ¾ of the trade at 1.3254 with stops now brought down to breakeven as we attempt to target the 1.3220 support target. Although we are looking lower in intra-day trade, we note the medium-term outlook does leave room for a test of key Fibonacci confluence around 1.3340-55. Broader bias remains bullish above 1.3140.
NZDJPY- Currently holding a short from 70.74 – again here we’ve booked ¾ of the position at 70.35 (Long-term 61.8% extension taken from the 2009 and 2011 lows) with stops now at breakeven targeting the 100% Fibonacci extension taken from the 2011 and 2012 lows at 70.05. Note that the NZDJPY has compromised significant multi-year technical resistance this month with our broader bias on the pair heavily weighted to the topside. However with daily RSI coming off extremes not seen since late 2006, we are simply looking to play a corrective pullback. Previously in late 2005, daily RSI reached as high as 90 before the pair plummeted some 1800 pips into the 2006 lows. Coupled with the NZDUSD hold seen at the Key 8465 resistance mark, the downside here is likely to yield some favorable scalps.
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---written by Michael Boutros, Currency Strategist with DailyFX
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