Bearish pattern breaks psychological level at 1.3000.
• EUR/USD’s major bearish reversal pattern has broken psychological support at 1.3000 and assisted our model portfolio short position.
• The move is being weighed by a recent DeMark™ exhaustion signal and is likely to lead to a further increase of volatility over the next few weeks.
• A sustained close below 1.3000 unlocks the important multi-month reversal pattern for a fast move into 1.2626 (16 January swing low).
• Meanwhile, only a sustained daily close back above 1.3284 (01st May high), puts this scenario on hold for a potential recovery into our upside target zone at 1.3430/60 (200-day average).
• Inversely, the USD Index recovery has extended back above its multi-week triangle consolidation. Support remains at 78.60 and 78.09.
• Expect these levels to act as one of the last points of defence for a re-launch of the greenback’s recovery which is still part of the bullish cycle into 80.73 (15th March high) and 81.78 (13th January swing/12 month high).
Approaches strong support.
• GBP/USD is showing early signs of basing on the approach to the old swing high at 1.6063 as the pullback from 1.6302 stalls.
• While we could see further choppy activity over the short-term the overall tone remains positive and we look for 1.6063 to more or less contain current weakness prior to basing for an extension of the 1.5235 advance.
• Re-capture of 1.6199 would suggest completion of the correction, setting the stage for an attack on 1.6302 then 1.6500/1.6618 (psychological/August reaction high) as the bull run extends.
• Settlement back below 1.6063 from here would suggest stalling upside momentum, while loss of 1.5805 would threaten key support at 1.5603 (12th March low) in a much deeper retracement of the 1.5235 advance.
Holding beneath 80.00.
• USD/JPY’s bearish pullback (originally triggered by a DeMark™ signal) remains weak beneath key psychological level at 80.00.
• The move continues to trade within a multi-week bear channel (see intra-day chart). Only a snap back above the upper ceiling near 80.50 signals a potential recovery higher into 82.00.
• This may offer renewed buying opportunities in our model portfolio forUSD/JPY’s major long-term 40-year cycle upside reversal.
• A decisive confirmation above 83.40 and 84.18 will extend the bullish recovery which had already risen almost 10% in only 7 weeks! The key medium-term upside trigger level can be found at 85.50.
• Meanwhile, sustained weakness beneath 80.00-80.12 (38.2% Fibonacci retrace/January advance), will lead to further setbacks into critical support at 79.16 (61.8% Fibonacci).
Holding above 0.9252 for now.
• USD/CHF has extended gains from 0.9043 (1st May low) to breach the 0.9252 swing high posted on 16th April, maintaining a gap on the daily charts.
• If the break of 0.9252 can be sustained over the next few sessions this would be positive exposing key resistance at 0.9335 (March swing high), breach of which would confirm a large base pattern switching the focus on to the year`s high at 0.9495 over subsequent weeks.
• In the meantime, failure to sustain the break above 0.9252, confirmed by loss of 0.9184 gap support, would shift odds back in favour of a return to 0.9042 (1st May low), loss to threaten key support at 0.9002/0.8931 initially.
Bullish surge targets 200-day MA (1.0055).
• USD/CAD’s bullish surge has reversed higher and is now targeting its 200-day average (which is currently trading at 1.0055).
• However, the bulls still need to confirm above the long-term 200-day moving average, then 1.0080 to signal a sustained upside recovery.
• Such a scenario would target resistance at 1.0160, then 1.0250 and resume the larger cycle recovery higher into 1.0424 (14th December high).
• Only a decisive break back beneath 0.9776 would resume the multi-month downtrend into next support at 0.9726.
• EUR/CAD, which tends to share a positive correlation with EUR/USD, is still range bound after the recent sharp drop which was triggered by a DeMark™ exhaustion signal. Watch for renewed downside pressure through 1.2965, thereafter unlocking key support at 1.2877 (2012 low).
Strong support at 127.10 expected to hold.
• GBP/JPY is showing early signs of basing in the 127.10/129.58 projected support zone as the corrective pullback from 131.80 falters.
• While we could see further choppy activity over the short-term the pullback from 131.80 appears to be a bear phase within a correction of the 117.28/133.50 January/March bull swing and we look for basing above 127.10 for another swing higher.
• Breach of 129.58 would suggest base completion, with scope then for an attack on 131.80 then the 133.50 March swing high, above which opens 135.12 as this year`s rally from 117.28 extends.
• In the meantime, loss of 127.10 would suggest completion of a top pattern, increasing the risk of seeing a return to 121.69 then psychological 120.00 as medium-term bears gain control.
Vulnerable while under 104.62.
• EUR/JPY remains under pressure having settled firmly below the 104.62 swing low posted on 16th April.
• The downside break extended the pullback from the 111.44 March swing high and while below 104.62 the risk is seen for an extension of the decline towards the 100.75/102.21 region where congestion support and projected left shoulder support comes in.
• The bigger picture remains more constructive as the pullback from 111.44 appears to be the right shoulder of an inverted H & S base pattern, with re-capture of 104.62 then 105.57 to suggest that bulls have gained control.
• Settlement below 100.75 would negate the base pattern, instead risking breakdown to the year`s low at 97.03.
Early signs of support near 0.8000.
• EUR/GBP has extended weakness after seeing a gap down through major support coming in from the June 2010 low at 0.8067, although psychological support at 0.8000 is holding for now.
• While we could see some corrective activity over the short-term to unwind the oversold condition the overall tone remains negative and we look for gap resistance at 0.8095 to cap for an extension of weakness towards 0.7841 then 0.7693 (supports in 2008) over coming weeks.
• We would need to see settlement back above 0.8095 to suggest basing potential, with scope then for a re-test of 0.8222 and possibly 0.8424 as recent losses unwind.
Holding above 1.2000 for now.
• EUR/CHF continues to mark time just above the key 1.2000 level as the threat of SNB intervention helps to form a floor.
• While we could see further corrective upside activity the overall tone remains negative after breach of the February swing low at 1.2031 and while 1.2050/1.2070 caps we see risk of an attack on retracement support at 1.1905 initially as the major downtrend extends.
• Settlement above 1.2050/1.2070 from here would suggest basing potential, while re-capture of 1.2147 would confirm a base pattern calling for a return to broken support at 1.2226 initially.
Renewed setback breaks through $1600.
• Achieved Price objective 1 and 2. Lowered stop to $1615, to lock in profits and ensure a risk free trade.
• Gold is maintaining its setbacks beneath that all-important psychological level at $1600. The move is within striking distance of key support areas at $1567/70 (multi-month channel support) and $1522 (29th December swing low).
• A sustained confirmation beneath here would resume risk for a much larger decline that we have been anticipating. Keep in mind that our cycle analysis continues to highlight downside targets into $1460 and $1300.
• This would likely trigger a temporary, but dramatic setback that would ultimately offer a unique tactical buying opportunity into the coming summer/autumn months of 2012.
• Only a sustained confirmation above $1716 and $1810 will put the bearish scenario on hold and offer further extended recovery higher on gold.
Pattern breakout targets key support at 28.9525.
• Achieved Price objective 1. Lowered stop to 30.1250, thereby ensuring a risk-free trade.
• Silver’s recent bearish breakout from a multi-month pattern, which we had been expecting, is currently testing key support at $28.9525 (TDST level).
• A sustained weekly close beneath here will unlock further extended setbacks into 26.9600 (50% retrace Fib/1999 bull market), then 26.0700 (September 26th major swing low).
• Meanwhile, the bulls need to push back above $30.0000 (psychological level) and 31.4375 (27th April peak) to unwind downside pressure.
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