Forex Trading

Action Insight | Written by ActionForex.com | Jan 29 07 14:52 GMT |
Forex Mid-Day Technical Report Weakness in Yen and Sterling Persists

Sterling and Japanese yen remain weak against dollar in quiet trading today. Upbeat CBI distributive trade, what beat expectation of 14 and rising to a reading of 30 in Jan, was ignored by the markets as Sterling edges further lower to 1.9547. Focus remains on adjusting positions after last week’s dovish BoE minutes that practically eliminated the chance for a Feb hike.

After breaking to a fresh four year high at 122.17 earlier today, USD/JPY turns sideway. However, there is no apparent buying the the Japanese yen that pushes for a stronger recovery. Short term outlook in the yen remains bearish. In particular, overnight’s weak retail sales data are suggesting that markets will get another disappointment in the household spending data in the coming Asian session.

Elsewhere, dollar is mixed, staying range bound against Euro and Swissy, rising against Aussie but falling against Lonnie. Traders should remain cautious today and tomorrow, waiting for the upcoming key events of GDP, FOMC and then NFP that could spark much higher volatility in the markets. EUR/USD

Daily Pivots: (S1) 1.2880; (P) 1.2912; (R1) 1.2948; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

EUR/USD remains bounded in sideway trading in tight range of 1.2876 and 1.2935 today. Outlook remains unchanged as intraday bias remains on the downside as long as EUR/USD stays below 1.2935. Further decline is expected to follow to retest 1.2865 low and then trend line support at 1.2846. Break will confirm that whole fall from 1.3364 has resumed for next downside target of 1.2760 support.

On the upside, above 1.2935 will turn intraday outlook consolidative but upside should be limited below 1.3000 resistance and bring decline resumption. It will take a break above 1.3000 to indicate that consolidation from 1.2865 low is still in progress and in such case, put focus back to 1.3052 resistance (38.2% retracement of 1.3364 to 1.2867 at 1.3057)

In the bigger picture, an important medium term top could be in place at 1.3364 already, with bearish divergence condition in weekly MACD and RSI. Sustained break of 1.2760 support, which will also have medium term rising channel line (now at 1.2748) taken out too, will add much weight to the case that whole medium term up trend from 1.1639 has completed. Focus will then be on 1.2483 cluster support (50% retracement of 1.1639 to 1.3364 at 1.2502). Decisive break of 1.2483 cluster support will confirm this case and have medium term outlook turned bearish.

However, decisive break of 1.3052 cluster resistance will indicate the fall from 1.3364 has possibly completed after drawing support from resistance line (1.2978 to 1.2937, now at 1.2851). This will also save the case that medium term up trend from 1.1639 is still in progress with EUR/USD kept inside the rising channel. Break of 1.3296 resistance will suggest the rise from 1.2483 has possibly resumed and EUR/USD could make a new high above 1.3364 before finally making a top on above mentioned bearish divergence condition in weekly chart.

GBP/USD

Daily Pivots: (S1) 1.9543; (P) 1.9612; (R1) 1.9667; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

Cable edges further lower to 1.9546 today. At this point, intraday bias remains on the downside as long as cable stays below 1.9614 minor resistance. Further decline is expected to follow towards rising trend line (1.8517 to 1.8834, now at 1.9469).

Above 1.9614 will turn intraday outlook consolidative and bring some mild recovery. But still, break of 1.9679 is needed to indicate that fall from 1.9913 has completed. Otherwise, risk of another fall remains.

In the bigger picture, right now, we already have bearish divergence conditions in weekly RSI, daily MACD and RSI. Sustained break of 1.9588 cluster support will be the a warning that whole rise from 1.8517 has completed earlier than we thought. Break of mentioned rising trend line support will confirm such case and bring much deeper decline towards 1.9237/61 cluster support (23.6% retracement of 1.7047 to 1.9913 at 1.9237). Decisive break of this 1.9237/61 cluster support will add much weight to the case that whole medium term up trend from 1.7047 has already completed and much deeper decline should be seen towards next cluster support at 1.8834 (38.2% retracement of 1.7047 to 1.9913 at 1.8818).

Meanwhile, a strong break above 1.9679 resistance is needed to save that case that rally from 1.9261 is still in progress. In such case, further rise should be seen to retest 1.9913 high and break will confirm whole rally from 1.8517 has resumed. But still, close attention will be paid to sign of loss of upside momentum and reversal pattern formation as cable approaches key 2.0106 cluster resistance (1992 high, 100% projection of 17047 to 1.9024 from 1.8090 at 2.0067) as the whole medium term up trend from 1.7047 could complete at or below this level.

USD/CHF

Daily Pivots: (S1) 1.2480; (P) 1.2525; (R1) 1.2576; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/.

USD/CHF is bounded in sideway trading in tight range today, struggling around medium term falling trend line resistance (1.3238 to 1.2768, now at 1.2549) But still, further rise is expected to follow as long as USD/CHF stays above 1.2486 support. As discussed before, sustained break of the trend line resistance should bring further rise towards 1.2768 cluster resistance (61.8% retracement of 1.3283 to 1.1878 at 1.2746)

On the downside, below 1.2486 will turn intraday outlook consolidative first but pullback should be contained above 1.2422 support and bring rally resumption. A break below 1.2422 support is needed to shift focus back to the downside to 1.2374 low. Otherwise, consolidation should be brief and rally should resume sooner rather than later.

In the bigger picture, decisive break of medium term trend line resistance will also indicate that whole medium term down trend from 1.3283 has already completed at 1.1878. Further rally should be seen towards 1.2768 cluster resistance first. Decisive break of 1.2768 cluster resistance will add much weight to the case that whole corrective rise from 1.1288 (04 low) has resumed and further rally should be seen towards 1.3283 (06 high) or above.

On the downside, below 1.2374 will have the short term rising channel (now at 1.2411) taken out too and will indicate the whole rebound from 1.1878 has possible made a top after failing to break 1.2501/49 resistance zone decisively. Deeper correction should then be seen towards 1.2268 resistance turned support in such case.

USD/JPY

Daily Pivots: (S1) 121.29; (P) 121.45; (R1) 121.71; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

USD/JPY turns sideway after breaking to fresh four year high of 122.17 earlier today. But still, further rally is expected to follow towards 123.23/29 cluster projection level as long as USD/JPY stays above 121.68 minor support. Touching of 121.68 will turn intraday outlook consolidative first and bring retreat towards 121.22 support or lower. However, rise from 114.41 is still in force as long as USD/JPY stays within short term rising channel (lower channel line at 120.78 now) and any interim consolidation should be brief.

In the bigger picture, as medium term rally from 108.99 is still in force, such rally is treated as resumption of whole up trend from 101.65 for the moment. With price actions from 117.87 to 114.41 treated as interim consolidation, next upside target will be 123.23/29 cluster projection level (100% projection of 114.41 to 119.68 from 117.96 at 123.23. 100% projection of 108.99 to 117.87 from 114.41 at 123.29).

On the downside, sustained break of the short term rising channel will indicate a short term top is formed and should bring pull back towards 117.96 support. Also, as bearish divergence condition remains in 4 hours MACD and RSI, this would also be a warning that a much deeper decline is underway.

Forex News Digest

http://c.moreover.com/click/here.pl?r787354165
Mon, 29 Jan 2007 12:02:00 GMT from Reuters

http://c.moreover.com/click/here.pl?r787347402
Mon, 29 Jan 2007 11:54:00 GMT from Reuters

http://c.moreover.com/click/here.pl?r787319588
Mon, 29 Jan 2007 11:27:00 GMT from Houston Chronicle

http://c.moreover.com/click/here.pl?r787318804
Mon, 29 Jan 2007 11:26:00 GMT from Reuters South Africa

http://c.moreover.com/click/here.pl?r787278108
Mon, 29 Jan 2007 10:43:00 GMT from Washington Post

http://c.moreover.com/click/here.pl?r787200110
Mon, 29 Jan 2007 09:16:00 GMT from The Australian

http://www.bloomberg.com/apps/news?pid=20601083&sid=aXV50hdZOB6w&refer=currency

http://www.bloomberg.com/apps/news?pid=20601083&sid=aR_COTf2q.T8&refer=currency

http://www.bloomberg.com/apps/news?pid=20601083&sid=amnzRIrVGRq0&refer=currency

http://www.bloomberg.com/apps/news?pid=20601083&sid=ak9oqpFbvcKY&refer=currency

http://www.bloomberg.com/apps/news?pid=20601083&sid=avZ2mwnqJ_3k&refer=currency

http://www.actionforex.com/latest_news/latest_news/forex_news_20060323537/ Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
23:50 JPY Japan Retail sales M/M Dec -0.20% N/A 0.10% 0.00%
23:50 JPY Japan Retail sales Y/Y Dec -0.30% -0.50% -0.10% -0.20%
23:50 JPY Japan Large retailer sales Dec -3.40% -1.90% -0.70% -0.80%
11:00 GBP U.K. CBI trade survey Jan 30 14 25
17:00 USD U.S. Midwest manufacturing Dec N/A 104.4

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