| FORECAST ON FOREX MAJORS |
| Friday, April 23, 2004 1:52 GMT Daily Report By Ian Copsey, FX-Strategy http://www.fx-strategy.com |
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| FX Analyst - Pro Commentary |
| General Market Conditions The rejection of the Dollar's rally at 1.1775 Euro, 1.3192 Swissie and 1.7624 Pound have all produced a pullback that threatens the respective resistance levels at 1.1915-35, 1.3040-50 and 1.7815-35. On the face of things this could be a group of expanded flat corrections and as long as the pullback levels hold we should see resumption of the Dollar uptrend. However, as we went through the analysis this morning we were once again struck by the rather erratic price structure in the Dollar's rise which has caused us some concern. For now we retain a cautious bullish outlook but be aware that any break through the Dollar support levels could change the picture quite strongly and we would then look for a deeper medium term pullback. Thus for today, to be prudent, watch levels and trade with breaks. Against the Japanese Yen we are mixed and will watch for breaks here also. Have a great weekend. |
| USDJPY |
| Price: 109.50 Day View Resistance: 109.70 ... 110.10 ... 110.50 ... 110.75 Support....: 109.30 ... 109.05 ... 108.65 ... 108.50 Bias: Mixed - waiting for breaks Bullish: Initial trading looks bearish today but there is important support at 109.10-15 and while this holds and on a break back above 109.50-70 we would then look for follow-through above 109.86 and through to 110.75 at least and possibly 111.05. However, these higher levels may well hold. Bearish: The high at 109.86 looks to be part of a complex correction and this should mean that initial trading should remain below 109.55-70 and allow losses to extend down to the 109.10-15 area. Caution advised here - any breach of 109.00 would imply a deeper pullback to 108.65 at least. Further support is at 108.45.  Week View Resistance: 110.20 ... 111.55 ... 112.00 ... 114.10 Support....: 108.50 ... 107.10 ... 106.65 ... 105.80 Further marginal gains were seen above the 4-hour Pivot Cloud but in a rather erratic manner. Schaff Trend Cycle is now declining while FXS-RSI has dipped from just above overbought territory. We still cautiously look for a move to 111.05 but require a break here to maintain upward momentum. Break of 108.45-65 would concern. Bullish: The rally over the past week or so has not quite been consistent with our strongly bullish stance and we are becoming a little more cautious about how far it can go in this current phase. However, on balance we do feel that a move to 111.05 is likely - possibly even 111.75 but we would like to see clean break here to suggest further direct strength is a possible. Bearish: The rally in the Dollar has not been as clean as expected and does raise some concern. However, only below 108.45-65 would cause us to consider the move higher is complete. Thus, on a reversal from 111.05-75 or a direct break of 108.45 woe would then look for a deeper pullback towards 106.80-107.20. Month View (Updated 19th April) Resistance: 109.25 ... 111.15 ... 112.30 ... 114.90 Support....: 104.80 ... 103.30 ... 101.30 ..... 99.50 Having seen a move back above the 107.21-65 area the emphasis appears to be back on the upside in line with the bullish weekly and monthly cycles. We require 104.80-00 to hold for this and a move back above 109.25 would encourage gains up to 111.15, 112.32 with 114.90 being a higher target to keep in mind. Back below 104.80 would threaten the 103.42 low and call for losses down to 100.40. |
| EURUSD |
| Price: 1.1920 Day View Resistance: 1.1940 ... 1.1950 ... 1.1990 ... 1.2015 Support....: 1.1890 ... 1.1870 ... 1.1840 ... 1.1815 Bias: Slightly mixed - wait for breaks Bullish: The 1.1775 support held cleanly yesterday and has generated a test back to 1.1930. The 1.1930-40 area is crucial for the downside and any break above this level would imply a deeper move higher. If seen the next stop should be around 1.1990 and 1.2015 which may hold on the day. Further resistance is at 1.2080. Bearish: The recovery from 1.1775 does look to be part of an expanded flat correction with a maximum upside of 1.1930-35. While this holds and we see a break back below 1.1890 and 1.1840 we would then feel more comfortable with looking for a stronger move lower. Next support is the 1.1775 low and once through here next support is at 1.1725 and 1.1650.  Week View Resistance: 1.1940 ... 1.2020 ... 1.2077 ... 1.2220 Support....: 1.1775 ... 1.1655 ... 1.1560 ... 1.1490 The recovery from 1.1775 has broken above the 4-hour Pivot Cloud and is threatening the crucial 1.1930-35 resistance. Schaff TC1 is now rising though high while FXS-RSI has matched this rally and is currently in neutral territory. The 1.1930-40 area is crucial and given the choppy decline we are mixed and should any breach of 1.1940 be seen then we could be talking about a longer term pullback. Bullish: The recovery from 1.1775 is threatening the 1.1940 resistance as we write and any break will cause the entire downside to reverse. Any further gains now would imply follow through to 1.2015 and probably back to 1.2145. Further resistance seen at 1.2220. Bearish: Having seen the Double Top target met yesterday we need to be cautious and the current test of the crucial 1.1940 resistance is key to the downside. From this level we require a move back below 1.1840 and 1.1775 to keep the downside intact. Once through we would then expect to see losses continue to 1.1560 and 1.1490-00. Month View (Updated 19th April) Resistance: 1.2085 ... 1.2325 ... 1.2455 ... 1.2655 Support....: 1.1720 ... 1.1560 ... 1.1310 ... 1.1165 While the progress lower has been choppy we do feel that the repeated rejection around 1.2400-55 and the decline from there should now allow price to move down to the Double Top target around 1.1720-50 and we suspect now a stronger decline. Support at 1.1560 may hold for a while but we while 1.1820-50 holds we consider the larger risk to be lower to 1.1165 over the next 4-6 weeks. . |
| USDCHF |
| Price: 1.3060 Day View Resistance: 1.3070 ... 1.3090 ... 1.3115 ... 1.3140 Support....: 1.3035 ... 1.3015 ... 1.2990 ... 1.2930 Bias: Slightly mixed - wait for breaks Bullish: The pullback from 1.3192 is approaching the key 1.3035-40 pivot support and this needs to hold to keep the upside intact. Thus, while it holds and we see a recovery back above 1.3115 and 1.3140-50 we would then feel more comfortable with calling for a stronger move higher. Next resistance is at 1.3215 and 1.3255. Bearish: The failure at 1.3192 was slightly short of expectations but we are now declining to test the 1.3035-40 support. Given the erratic nature of the rally over the past week we do see some risk of a deeper decline. Break of 1.3030 would generate a stronger reaction lower which would then suggest losses to 1.2935 and possibly 1.2825 on a strong decline.  Week View Resistance: 1.3225 ... 1.3305 ... 1.3385 ... 1.3490 Support....: 1.3040 ... 1.2935 ... 1.2825 ... 1.2710 The current move down towards 1.3040 has broken slightly below the 4-hour Pivot Cloud and the 1.3035-40 area needs to hold to maintain the upside. Schaff Trend Cycle is now declining but low while FXS-RSI is also moving lower towards oversold territory. We have re-assessed the recent strength in the Dollar and see a risk that if the 1.3035-40 area is broken we cold see the start of a longer term correction. Thus some care needs to be used. Bullish: The uptrend has been erratic although while 1.3035-40 holds and a break is seen back above 1.3150 we would then expect follow-through to 1.3215 and possibly as high as 1.3305. Break is needed here to keep the momentum moving higher towards 1.3375 and 1.3485. Bearish: With the decline from 1.3192 biting deeper and the rather erratic nature of the recent rally we must be aware of the possibility of a stronger decline if the 1.3035-40 support breaks. On breach we would then expect a decline to 1.2935 and probably 1.2825 at least. Next support is at 1.2775. Month View (Updated 3rd April) Resistance: 1.3085 ... 1.3235 ... 1.3410 ... 1.3700 Support....: 1.2625 ... 1.2515 ... 1.2180 ... 1.1700 The expected move higher has met with some early choppy price action but we feel this should now move onto the 1.3220-35 area this month at the very least and do see some risk of seeing gains extend to 1.3410. Watch this area since it could cause a pullback. Further resistance is around 1.3700. |
| GBPUSD |
| Price: 1.7750 Day View Resistance: 1.7765 ... 1.7790 ... 1.7815 ... 1.7835 Support....: 1.7730 ... 1.7710 ... 1.7680 ... 1.7660 Bias: Mixed - waiting for breaks Bullish: We have seen a recovery from 1.7624 which actually looks progressive. However we still need to see break of 1.7815-35 and if this resistance breaks then we would expect to see a stronger move higher. Once through next resistance is at 1.7890 and then 1.7940. Bearish: The recovery from 1.7624 has been firm. However, while 1.7815-35 holds there still remains risk of a move down through 1.7710 towards 1.7660-80. Break of this support is required to confirm stronger losses down trhough 1.7624 to 1.7570 and 1.7445.  Week View Resistance: 1.7840 ... 1.7900 ... 1.7980 ... 1.8065 Support....: 1.7625 ... 1.7595 ... 1.7445 ... 1.7320 Losses have taken price further below the 4-hour Pivot Cloud but stalled at 1.7624. Schaff Trend Cycle is now rising but high while FXS-RSI is beginning to rise from oversold territory. We have reviewed the larger wave structure and we a re slightly concerned at the structure of the decline that does have potential to be terminal. Thus watch the 1.7835 area closely for any break would reverse the downtrend. Bullish: Key resistance is at 1.7835-40 and any break above here would threaten a longer term recovery. First resistance is at 1.7890 and then 1.7940 but we would look for an eventual move back to 1.8145. Bearish: The failure at 1.7624 was unexpected and we can only retain a bearish outlook while 1.7835 holds. While this does and we see reversal lower through 1.7660 we would feel more confident of the original projection of a strong decline down to 1.7570 and 1.7445. Further support is seen at 1.7320. Month View (Updated 19th April) Resistance: 1.8300 ... 1.8605 ... 1.8875 ... 1.9025 Support....: 1.7650 ... 1.7165 ... 1.6905 ... 1.6565 The move lower has met with a choppy start but we feel that we should now see losses resume and expect to see progress to the next support at 1.7650 this week. From there we should see a correction develop but the coming 4-6 weeks looks bearish towards 1.7165. |
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