Technical Report – March 11, 2013 Monday Open: Euro Fails at Trend Channel resistance

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11.03.12Chart of the Day: EUR/USD

EUR/USD: The Euro saw a pickup in volatility last week, as a rally was staged early in the week, only to drop back to the 1.30 level into the Friday close. The failure did occur at important resistance levels, and these latest moves confirm that the downtrend channel formed at the beginning of last month is still valid. This turns the medium term focus back on the yearly lows at 1.2960, and any attempts at a rally from here are expected to be met with selling pressure. To the upside, initial resistance can be seen at 1.3180 but with indicator readings clearly bearish, we we likely won’t see these levels at the early part of the week.

USD/JPY: The USD/JPY pushed to new highs for the week (completing the strong Friday rally) and prices have now pushed through sell order barriers in the 96 region en route to new yearly highs at 96.50. The rally is starting to create heavily oversold indicator readings, however, and with long term Fib resistance coming close, a downside reversal is becoming more likely. Specifically, the 61.8% Fib retracement of the decline from 110.60 is now seen at 96.90, so this area can be used for short term sell positions into the upper 96s. The longer term view is still bullish, however, but we will need to see a clear break into the 97 before buy on dips strategy lose the risk for reversal.

GBP/USD: The GBP/USD continues to be one of the big losers in the majors, and prices continue to post new yearly lows after the break of the long term quadruple bottom at 1.5150. We are now trading solidly below the 1.50 area, so the preferred bias is to sell on rallies. First level of resistance now comes in at 1.52, so if we can see prices trade into this area, risk is reduced when stepping back into the long term downtrend. Initial support is now seen at 1.4880.

USD/CHF: The USD/CHF continues to press higher, with resistance at 95 now removed. Indicator readings have moved into oversold territory, so we will need to see some downside correction before buying in for the long term uptrend. First buy area is now seen at 94.2

 

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