Forex Trading

Action Insight | Written by ActionForex.com | Apr 12 07 13:34 GMT |
Forex Mid-Day Technical Report EUR/USD Remains Firm after ECB on Hold, but EUR/JPY Retreats

Euro remains firm against dollar after ECB kept rate unchanged at 3.75% today as widely expected. Trichet’s comments in the press conference was pretty much the same as before and no “vigilance” is used to signal a May hike. Instead, Trichet used the wordings like “monitor very closely” and remains hawkish by saying that risks to price stability remains on the upside in the medium to longer term and “acting in firm and timely manner remains warranted” in order to avoid these risks to materialize. This is inline with the expectation that ECB will likely act in Jun again. However, EUR/JPY retreats mildly as the yen recovers across the board in early US session.

Dollar is mildly weaker after jobless claims came in at 342k, higher than expectation of 320k. Meanwhile, both export price and import price rose more than expected in Mar by rising 0.7% and 1.7% mom respectively. Canadian dollar was boosted mildly against dollar after stronger than expected new housing price index which rose 0.5% in Feb. EUR/USD

Daily Pivots: (S1) 1.3410; (P) 1.3425; (R1) 1.3443; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

EUR/USD turns sideway after reaching as high as 1.3477 earlier today. But short term bias remains on the upside as long as EUR/USD stays above 1.3406 support. Further rally is still expected towards 1.3668 resistance (04 high). However, 1.3406 support will turn short term outlook consolidative but the rally from 1.2865 should remain in force as long as EUR/USD stays within short term rising channel (lower channel at 1.3308 now).

In the bigger picture, outlook remains unchanged EUR/USD is still trading comfortably within medium term rising channel (1.1639, 1.2483, 1.2978) and medium term up trend from 1.1639 is still in progress. Such up trend is interpreted as having first move completed with three waves up to 1.2978, subsequent sideway consolidation completed at 1.2483. Rise from 1.2483 has made a top at 1.3364 but subsequent correction has completed with three waves down to 1.2865 already. The current rise from 1.2865 should represent resumption of this whole up trend and further rise is still in favor to retest 1.3668 (04 high).

On the downside, break of the short term rising channel will warn that rally from 1.2865 has completed and focus will then be on 1.3253 support. Break will confirm such case and bring deeper decline for a retest of the medium term rising channel (now at 1.2934).

GBP/USD

Daily Pivots: (S1) 1.9699; (P) 1.9757; (R1) 1.9806; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

Cable continues to consolidate below 1.9824 high today. Short term outlook remains neutral at this point. As a short term top is in place at 1.9824 with bearish divergence in 4 hours MACD as well as breaking of the short term rising channel, firm break of this 1.9824 resistance is needed to confirm recent rally has resumed for 1.9913 high. Otherwise, cable should still be bounded in consolidation that started at 1.9824 and another fall would still be seen before finishing the consolidation.

On the downside, below 1.9703 support will indicate the rebound from 1.9591 has completed and should bring retest of this low to continue the consolidation. But downside of the consolidation should be contained by 1.9434 cluster support (1.9183 to 1.9824 at 1.9428) and bring another rally.

In the bigger picture, rise from 1.8090 is still in progress after corrective fall from 1.9913, which should have completed with three waves down to 1.9183, was supported by 1.9215/17 cluster support (50% retracement of 1.8517 to 1.9913 at 1.9215, 38.2% retracement of 1.8090 to 1.9913 at 1.9217). The rise from there should represent resumption the whole rally from 1.8090 and hence further upside is expected. However, with bearish divergence conditions being displayed in weekly RSI and daily MACD a medium term top could be around the corner. The up trend from 1.7047 could make a top after reaching 2.0046/0106 cluster resistance zone (1992 high, 100% projection of 17047 to 1.9024 from 1.8090 at 2.0067, 61.8% projection of 1.8517 to 1.9913 from 1.9183 at 2.0046. And hence, focus will be on reversal signal as cable approaches these levels.

On the downside, below 1.9434 cluster support will dampen the above view and argue that the whole rise from 1.9183 has completed. Focus will then be turned back to 1.9215/17 cluster support and sustained break will indicate that the whole up trend from 1.7047 might have completed earlier then we thought and should the bring deeper correction to 1.8517 support first.

USD/CHF

Daily Pivots: (S1) 1.2171; (P) 1.2197; (R1) 1.2231; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

USD/CHF weakens mildly in early US session but short term outlook remains unchanged. The corrective rise from 1.2029 is likely still in force as long as the inner rising trend line remains intact. Another rise to 1.2281 resistance and above towards next cluster resistance at 1.2354 (61.8% retracement of 1.2550 to 1.2029 at 1.2351) cannot be ruled out.

However, break of 1.2142 support will be the first signal that consolidation from 1.2029 has completed and should bring further fall towards 1.2082 support. Break will encourage a retest of this 1.2029 cluster support (78.6% retracement of 1..1878 to 1.2571 at 1.2026).

In the bigger picture, medium term outlook remains bearish with USD/CHF staying below both 55 days EMA and 55 weeks EMA. Daily and weekly MACD is still staying negative, supporting this view too. The preferred interpretation at this point is that the whole down trend from 1.3283 is still in progress with the first move from 1.3283 finished with three waves down to 1.1919. Subsequent rebound to 1.2768 was the interim correction and price actions from there represent resumption of such down trend. Further decline should be seen to 1.1878 low and sustained break will add more credence to this view and bring further medium term weakness towards 100% projection of 1.3283 to 1.1919 from 1.2768 at 1.1404.

However, note that USD/CHF is still bounded in wide range of 1.1878 to 1.2768. A rebound to above 1.2354 resistance will dampen this view and indicate that the fall from 1.2571 has completed after meeting 1.2027 fibo support. Another rise could then be seen to retest this high and then the upper end of the range at 1.2768.

USD/JPY

Daily Pivots: (S1) 118.99; (P) 119.25; (R1) 119.64; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

USD/JPY retreats mildly in early US session. At this point, USD/JPY is still bounded between 118.46 support and 119.48 fibo resistance (61.8% retracement of 122.17 to 115.13), short term outlook remains neutral.

On the one hand, break of inner rising trend line with bearish divergence condition in 4 hours MACD and RSI suggests that a short term top is formed. Break of 118.46 will add more credence to the case that a top is formed and, more importantly, the corrective rise from 115.13 could have completed and should then bring further decline towards 117.20 support and then 116.38. However, sustained break of 119.48 fibo resistance (61.8% retracement of 122.17 to 115.13) will indicate that stronger rebound is still underway, probably with a retest of 122.17 high.

In the bigger picture, our view remains unchanged. Previous break of medium term rising channel support (108.99, 114.41, 117.87) indicates the whole up trend from 108.99 has completed at 122.17. Weekly MACD’s stay below signal line is still supporting this. The corrective nature of the rise from 108.99 swings favors back to the case that such medium term rally is merely part of a large scale consolidation that started at 121.38, with first leg completed at 108.99 and second leg completed at 122.17. The fall from 121.17 should then the third leg of such consolidation and deeper decline should at least be seen to below 114.02/41 support zone (61.8% retracement of 108.99 to 122.17 at 114.02) first with much possibility of further fall to retest 108.99 low.

However, decisive break of 119.48 fibo resistance (61.8% retracement of 122.17 to 115.13) will argue that the price actions from 122.17 is developing into large range consolidation instead of correction to rise from 108.99. A retest of 122.17 high could be seen in such case. But still, firm break above this resistance is needed to confirm medium term rally from 108.99 has resumed. Otherwise, medium term outlook will be neutral at best.

EUR/JPY

Daily Pivots: (S1) 159.81; (P) 160.11; (R1) 160.64; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

EUR/JPY retreats mildly after reaching mentioned upside target of 100% projection of 150.75 to 155.72 from 152.64 at 160.68 and 100% projection of 152.64 to 158.801 from 155.34 at 160.71. But still, short term bias remains on the upside as long as EUR/JPY stays above 159.58 support. Further rally is still in favor towards upper boundary of medium term rising channel (now at 161.48).

However, risk of a short term reversal increases as EUR/JPY approaches this resistance, which will coincide with short term rising channel resistance (now at 161.40) too. Break of 159.58 will indicate a short term top is possibly formed and bring pullback towards lower end of the short term channel (now at 157.91).

In the bigger picture, we’re treating the whole year long rise from 130.60 as resumption of the long term up trend with first wave ended at 143.60, subsequent correction ended at 137.167. The third wave up could have ended at 159.63 with a diagonal triangle already. Fall from 159.63 should represent the fourth wave correction and has already met it’s target of 38.2% retracement of 137.16 to 159.63 at 151.05) and lower channel line (143.60 to 159.63, 137.16). The current rise from 150.75 should represent the final rally in the whole move targeting upper boundary of the medium term channel (now at 161.48). Attention will be paid to reversal signal as EUR/JPY approaches this resistance.

On the downside, break of the short term rising channel indicate that the rise from 150.75 low has completed and more importantly, will be the first warning that the medium term could be formed. In any case, deeper decline should be seen towards 155.34 support first in such case.

Forex News Digest

http://www.bloomberg.com/apps/news?pid=20601087&sid=aIzG9PDvdBvc&refer=home

http://www.bloomberg.com/apps/news?pid=20601087&sid=aZxxeogo09jw&refer=home

http://www.bloomberg.com/apps/news?pid=20601083&sid=amieic_oXK6A&refer=currency

http://c.moreover.com/click/here.pl?r883730414
Thu, 12 Apr 2007 08:25:00 GMT from Reuters

http://c.moreover.com/click/here.pl?r883729837
Thu, 12 Apr 2007 08:24:00 GMT from Reuters

http://c.moreover.com/click/here.pl?r883723569
Thu, 12 Apr 2007 08:19:00 GMT from Bloomberg

http://c.moreover.com/click/here.pl?r883674098
Thu, 12 Apr 2007 07:42:00 GMT from Bloomberg

http://c.moreover.com/click/here.pl?r883651481
Thu, 12 Apr 2007 07:27:00 GMT from AP via MSN Money

http://c.moreover.com/click/here.pl?r883618698
Thu, 12 Apr 2007 07:03:00 GMT from Nine MSN

http://www.bloomberg.com/apps/news?pid=20601083&sid=a.QvfoSB9h7k&refer=currency

http://www.actionforex.com/latest_news/latest_news/forex_news_20060323537/ Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
23:01 GBP U.K. RICS house price Mar 25.50% 21% 24% 24.80%
23:50 JPY Japan Domestic CGPI M/M Mar 0.30% 0.10% 0.00%
23:50 JPY Japan Domestic CGPI Y/Y Mar 2.00% 1.90% 1.80%
00:30 USD Fed’s Moskow Speaks
01:30 AUD AustraliaUnemployment rate Mar 4.50% 4.60% 4.60%
01:30 AUD Australia Employment change Mar 10.5K 15.0 K 22.0 K
08:30 GBP U.K. Trade balance (gbp) Mar -6.79B -6.25B -6.22B -6.4B
09:00 EUR Eurozone GDP Q/Q Q4 final 0.90% 0.90% 0.90%
09:00 EUR Eurozone GDP Y/Y Q4 final 3.30% 3.30% 3.30% 2.80%
11:45 EUR ECB rate decision 3.75% 3.75% 3.75%
12:30 EUR ECB Press conference
12:30 USD U.S. Jobless claims 342K 320K 321K
12:30 USD U.S. Export price index M/M Mar 0.70% 0.40% 0.70%
12:30 USD U.S. Import price index M/M Mar 1.70% 0.80% 0.20% 10.00%
12:30 CAD Canada New housing price index Feb 0.50% 0.30% 0.30%

http://www.actionforex.com/general_information/forex_newsletters/forex_newsletter_200507301487/