More pointless fundamental data from the US today with California still working through the backlog of unemployment claims following the computer problems, Philly Fed was better than consensus opinion although the dollar was utterly steamrollered anyway against all others. Continuations of these moves will be important, with recent highs still not breached in some key pairs although it’s hard to argue with the bearish dollar sentiment at the moment. Australian and Chinese data overnight may affect the Aussie but the overwhelming theme for some time will still be dollar weakness.
The dollar wasted no time in dropping sharply following the deal in Washington and dropped like a stone to break the recent lows. There are a few levels of support around this area for the index although a push through those exposes a lack of support beyond which may see another sharp drop. RSI is becoming quite oversold again although this has recently shown the willingness to push well below the 30 level so there is still room for another drop before levels become too extreme. I remain bearish USD
USD% Index Resistance (EURUSD support): EURUSD 1.3663, 1.3639, 1.3610
USD% Index Support (EURUSD support): EURUSD 1.3700, 1.3780
A dramatic push higher today saw the index post a fresh high having not really retraced too much recently compared to others. As such we remain in a bullish channel and have the 100% fib expansion in our sights not too far above. I remain bullish EUR
EUR% Index Resistance: EURUSD 1.3672, 1.3750, 1.3800
EUR% Index Support: EURUSD 1.3640, 1.3600, 1.3533
The push lower to meet broken major channel resistance turned support was rejected via dollar strength today although the index is still yet to push though the upper level of the expanding triangle formation caused by broken minor channel support turned resistance. Follow through for this push higher is critical with the index not looking as bullish as many others during this extreme of dollar strength I remain bullish JPY
JPY% Index Resistance (USDJPY Support): USDJPY 97.64, 97.60, 97.20, 96.70
JPY% Index Support (USDJPY Resistance): USDJPY 98.79, 99.50, 99.83, 100.14
USDJPY Trade Positioning
Short from 98.68, stops at 100.3
The Pound returned to strength today after a perfect rejection from bullish channel support although is yet to breach stiff resistance above and is currently positioned at a right shoulder should things run out of steam. A slight retracement is expected as profit taking following the several hundred pip run higher for Cable, however the bid sentiment is likely to remain. As such, I remain bullish GBP
GBP% Index Resistance: GBPUSD 1.6190, 1.6300, 1.6385
GBP% Index Support: GBPUSD 1.6066, 1.5964, 1.5900
Like all of the other charts today, the AUD% index pushed up strongly to print fresh highs and has been rallying now continuously for some time. Further upside is expected in the near term although a profit taking retracement still seems needed soon. 0.9700 has a cluster of resistance which may act as a trigger for profit taking unless further terrible things happen to the US economy.
I remain bullish AUD
AUD% Index Resistance: AUDUSD 0.9696, 0.9700, 0.9718
AUD% Index Support: AUDUSD 0.9576, 0.9533, 0.9500
Another spectacular push higher, as suspected, back into the recently broken bullish channel, although having dropped more during the retracement, the index now has further to go before breaching the recent highs. In the distance we have two more very interesting levels. A 100% fib expansion very close to a 200% fib expansion (from different drawing points obviously). It remains to be seen if we have legs to get up there but it is certainly possible given the negative dollar sentiment lately.
I remain bullish CHF
CHF% Index Resistance (USDCHF support): USDCHF 0.9000, 0.8992, 0.8962, 0.8935
CHF% Index Support (USDCHF resistance): USDCHF 0.9026, 0.9062, 0.9072
By Mark Lewis