Euro to Close Out 2011 in Bearish Form, Expose 1.2000 Over Coming Months
EUR/USD: The market is now looking to establish below the critical 2011 lows from January 2011 at 1.2870 and a weekly close below this level will open the door for the next major downside extension towards the 1.2500 area. Overall, we retain a strong bearish outlook for this market and look for setbacks to extend towards the 1.2000 handle over the coming months. While we would not rule out the potential for corrective rallies, any rallies should be very well capped above 1.3500.
USD/JPY:The market has managed to successfully hold above the bottom of the daily Ichimoku cloud to further strengthen our constructive outlook and we look for the formation of a inter-day higher low by 76.55 ahead of the next major upside extension back towards and eventually through the recent multi-day highs by 79.55. Ultimately, only a close back below the bottom of the Ichimoku cloud would negate outlook and give reason for pause, while a daily close back above 78.30 accelerates.
GBP/USD:Rallies have been very well capped ahead of 1.5800 and it looks as though a lower top has now been carved out by 1.5780 ahead of the next major downside extension back towards the October lows at 1.5270. Key support comes in by 1.5400 and a daily close below this level will be required to confirm bias and accelerate declines. Ultimately, only back above 1.5780 would negate bearish outlook and give reason for pause.
USD/CHF: The recent break above the critical October highs at 0.9315 is significant and now opens the door for the next major upside extension over the coming weeks back towards parity. A confirmed higher low is now in place by 0.9065 following the recent break over 0.9330, and next key resistance comes in by 0.9785. Ultimately, only back under 0.9065 would delay constructive outlook.
AUD/USD: Any rallies are classified as corrective and we continue to see this market in the process of carving out a major top ahead of the next downside extension back below the critical lows from October at 0.9385. The latest bout of consolidation has been broken and it now looks as though a fresh lower top is attempting to establish by 1.0380. Look for an acceleration of declines from here towards 0.9660 which guards against the critical October lows at 0.9385. Ultimately, only back above 1.0380 would delay outlook.
NZD/USD: Any rallies are classified as corrective and we continue to see this market in the process of carving out a major longer-term top. From here, we look for the formation of the next lower top by 0.7880 to be confirmed on a break back below 0.7370 over the coming sessions. Below 0.7370 should then accelerate towards next key support at 0.7110 further down. Ultimately, only back above 0.7900 would negate.
USD/CAD: Our constructive outlook remains intact with the market focused on a retest of the key October highs by 1.0660. From here, look for any interday pullbacks to be very well supported above 1.0000 on a daily close basis, in favor of an eventual break and fresh upside extension beyond 1.0660. Initial resistance comes in at 1.0425. Back above 1.0660 open a fresh upside extension towards 1.1000.
EUR/JPY:The latest break back below the daily Ichimoku cloud delays any hopes for a meaningful recovery on the cross and opens the door for a more significant decline below critical psychological barriers at 100.00. Although daily studies are oversold, the downtrend has been intense with the market trading by multi-year lows and showing no signs of reversal just yet. At this point, a break back above 102.55 will be required to alleviate immediate downside pressures.
GBP/JPY: This market could be in the process of establishing a major base following the September break to record lows. However, the latest round of setbacks will need to hold above 119.00 (key 78.6% fib retrace) on a weekly close basis for this newly adopted constructive outlook to remain intact. Look for a daily close back above 122.80 to confirm successful defense ahead of 119.00 and open the door for a bullish resumption. Otherwise, we could see risks for acceleration to fresh record lows below 116.80.
EUR/GBP: Setbacks have stalled just shy of the 2011 lows from January at 0.8285, with the market dropping aggressively down towards the 0.8300 handle ahead of the latest minor bounce. However, daily studies are finally correcting from oversold territory and with the RSI recovering, there are risks for additional short-term gains, potentially back towards the 0.8500 area before considering any fresh weakness.
US DOLLAR INDEX: The market is expected to remain very well supported on dips after showing some clear signs of a material base in the previous month. Key previous multi-week range resistance turned support was successfully defended in the 9,800 area, and from here, we look for a fresh medium-term higher low ahead of the next major upside extension back through 10,135. Ultimately, only a close back below 9,800 would give reason for concern, while intraday setbacks should find fresh bids towards 9,900. Above 10,135 opens fresh upside towards our next key objective at 10,250.
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