Bullish unless below 1.0428.
The Aussie dollar continued higher last week, reaching a peak of 1.0687 on Thursday on a bearish Inverted Hammer candle. It now faces a tough test at the twice-rejected level of 1.0764 dating back to September and October last year. That might be enough for the Aussie to take a well-earned pause, especially given its trajectory has become increasingly steep in the last few days and therefore vulnerable.
A more serious correction is likely if the Aussie closes below the low of January 24 at 1.0428. Next support is then at the Fibonacci 38% retracement of the gains since the Double Doji of November 24 and 25 (0.9540 – 1.0687) – ie at 1.0249. The 50% retracement mark is at 1.0113.
Following the 1.0764 level, next resistance is at the July highs of 1.1080 followed by the next major psychological resistance level of 1.1200
Sup: 1.0428 1.0249 1.0113
Res: 1.0760 1.1080 1.1200
Bullish unless below 1.2931.
Another week of strong gains for the euro but it should be remembered that this rally has occurred within a downtrend that started in May this year after a rejection of a peak made in November 2009. That means the gains, which are the speed of a dead cat bounce, could turn out to be just that.
Last week I mentioned that the strongly bullish candle of the week before last is usually followed by two to three more weeks of gains. If the euro is true to its form of late, then the gains could top this week or next and then resume the downtrend.
Friday’s peak was just below the Fibonacci 38% retracement of the losses since October 27 at 1.3245. The 50% retracement of the same distance is at 1.3436 and the Fibonacci 62% level is at 1.3627.
The outlook is less bullish if there is a move below Wednesday’s low of 1.2931. Next support is then at the Fibonacci 62% retracement of the gains since mid January at 1.2860 followed by the lows of the downtrend to date, at 1.2626.
Sup: 1.2931 1.2860 1.2626
Res: 1.3245 1.3436 1.3627
Bullish unless below 1.5533.
Another week of gains for sterling where it finished on its highs – this time at 1.5732. That implies more gains, at least on Monday. However it is now within the range of multiple resistance dating back to the peak of November 30 at 1.5779. If it can bust through this level next resistance is at the lows of November 3 at 1.5876 followed by the peak of October 31 at 1.6156. Beyond this level a major basing pattern has been confirmed with implications for a sustained uptrend.
The outlook remains bullish unless there is a move below Wednesday’s low of 1.5533. Next support is then at the Fibonacci 62% retracement of the gains since January 13 (1.5235 – 1.5740) at 1.5429. Next support is then at the low of January 13 at 1.5235.
Sup: 1.5533 1.5429 1.5235
Res: 1.5579 1.5876 1.6156
Bearish unless above 78.28.
Last week the yen formed a spike on Wednesday and then proceeded to sell off sharply over the rest of the week. It is now on a cliff edge – the potential ledge at 76.55, the multi-tested low of January 17. If there is a close below that level this week, it’s a quick trip to the lows of October at 75.31. Beyond that there is whole new realm of pain for the USD/JPY rate since that is the lowest point reached post-earthquake.
Buying, especially by the Japanese central bank, could happen to prevent that bearish outcome. If so the yen would need to close above the peak of Wednesday at 78.28 to banish the bearish outlook. Next resistance is then at the peak of late October at 79.53 then the high of July at 81.47.
Sup: 76.55 75.31
Res: 78.28 79.53 81.47