EUR/USD’s failure yesterday at triangle trendline resistance favors continued range contraction. Intermediate-term outlook remains neutral within the triangle but above the 38.2% Fibo from the Nov - Jan bull wave we favor an eventual resumption of the long-term bull trend. Sustained break above 1.2650 short-term trendline required to trigger any sort of upside momentum. Intraday we favor the downside after yesterday’s inability to hold above the 20-day SMA. USD/JPY’s failure to develop downside momentum on the break of the 105.50 fib level makes the pair extremely susceptible to a short squeeze. Oscillator divergences and a positive cross on the slow stochastic further support the bull side and a potential upside run. 106.30 moving average resistance remains key, with a sustained break above required to trigger any sort of significant move higher. While the longer-term picture remains overwhelmingly bearish, we now require a break below the 105.00 handle to confirm a true resumption of the downtrend. More lackluster trade in USD/CHF as the pair remains confined to the triangle consolidation on the daily. We are still unclear whether the consolidation is a precursor to one last gasp higher or the calm before a resumption of the long-term downtrend. Below the 50-day EMA we favor the latter. Yesterday’s false break below the 20-day SMA and a hammer on the daily biases the upside intraday.
The purpose of this blog is to help people learn more about forex trading, trading foreign currencies based on changes in the exchange rates. Please subscribe to the site and I will keep you informed of new articles and tutorials for advancing your skills in the currency trading arena. I also welcome comments and suggestions so drop me a line.
Friday, February 06, 2004