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Asian Session Notes 5/15/13: Aussy pairs at the brink of a pullback
GBPUSD
Resistance: 1.5245 minor / 1.5276 minor / 1.5330 moderate
Support: 1.5196(07) moderate / 1.5156 minor / 1.5076 strong
Cable saw a huge sell-off Tuesday with a follow through to its break of the bullish channel support line from March 12. Daily indicators has macd’s heading lower and stochastic in oversold territory. Note we are well supported at the 1.5196(07) price point. From the lower time frames 4H price action suggests we retain a bearish momentum despite the presence of our supports while stochastic has pushed oversold and macd is dropping. Hourly charts are a confluence of bears as well with stochastic crawling oversold and macd below the signal line. Looking at the calendar we face an event risk from the Uk with the inflation report set for release at 0930GMT along with Gov King’s press conference. We risk position squaring ahead of such an important event. Failure to push under 1.5196(07) early on, would see looking for a bounce going to the Inflation reports release.
USDJPY
Resistance: 102.43 minor / 103.00 minor / 103.78 moderate
Support: 102.15 moderate / 101.83 minor / 101.53 minor
USDJPY turned out to be among Tuesday’s big winners as we saw more than average daily ranges with the equity rally helping keep the yen week and macroeconomic imperatives keeping the dollar strong of late. We essentially the same kind of shifting policy directions between the BoJ and the Fed as that of the RBA and the Fed, the latter seen potentially ending its ultralow easing environment. Indicators show daily stochastic push further into overbought levels while macd is on the rise. In the lower time frames we have stochastic in overbought levels while macd is poised to cross up. Hourly charts for their part has stochastic heading lower and macd flat above the signal. Note we have data coming out at 2350GMT with the Tertiary Activity Index with consensus forecast already calling for a contraction. Consider poor numbers to be an excuse for further Yen dumping.
AUDUSD
Resistance: 0.9939 minor / 0.9994 moderate / 1.0030 minor
Support: 0.9882 moderate / 0.9821 minor / 0.9770 minor
Aussy continues to see follow through weakness from RBA’s surprised decision to cut rates previously. After the previous weeks sharp drop Tuesday turned out to be another bear market with prices now testing the 23.6 Fib retracement level of our rally from October of 2008. Note the next key support for Aussy is around 0.9581(02) our lows for the last two years, though charts need to take out the floor of a weekly symmetric triangle first. From indicators we have a confluence of bears in daily charts with stochastic pushing further into oversold levels while macd drops and price shows momentum building. In 4H charts we have another confluence of bears with macd crossing lower as we pushing oversold in stochastic. Hourly charts for their part has a bullish divergence in stochastic while macd bottoms out. Immediate risk calls for a pullback or a technical bounce off our moderate support. That said a close under 0.9882 will be a bearish entry, while shorts may also be taken off 0.9939.
AUDJPY
Resistance: 101.28 minor / 101.65 minor / 102.05 moderate
Support: 100.87 moderate / 100.67 minor / 100.24(39) moderate
We are set to see a hammer in the daily charts with prices inside our EMA lines as weakness in both Aussy and Yen meant limited range for a whipsawish pair as both sides pull in opposing directions. Daily indicators has a bearish cross and divergence in stochastic while macd is barely under its signal line. Intraday we are seeing mixed signals the latest candles a high spinning top while stochastic si pointing higher and macd going the other direction. In hourly charts we have a confluence of buys with stochastic heading for overbought levels and macd’s rising. Given the opposing forces of weak Aussy and weak yen we expect limited range for AUDJPY, likely seeing more whipsaw action. Consider a buy on dips to 100.24(39) or a sell on rallies to 102.05.
EURUSD
Resistance: 1.2953 minor / 1.2992 moderate / 1.3029 minor
Support: 1.2912 minor / 1.2879 moderate / 1.2838 minor
Euro was unable to stay under the daily broadening patterns support line to close Tuesday right at the breakout point 1.2935. From price action we have earlier attempts to bounce off the broadening pattern support thwarted by the daily EMA’s and their new dead crosses. Daily stochastic is pushing further into oversold levels while macd is dropping. From the lower time frames we have a confluence of bears in 4H indicators with stochastic oversold and macd just crossing lower while price charts has a dragonfly doji. Hourly charts for their part has macd bottoming out and stochastic heading for overbought levels. For now we prefer remaining sidelined, a close above 1.2953 opens the way for a bounce off your broadening pattern support. Meanwhile a break of 1.2912 underscores the idea of a bearish reversal from our pattern.
AUDCAD
Resistance: 1.0096 moderate / 1.0131 minor / 1.0169 minor
Support: 1.0066 minor / 1.0035 moderate / 1.0000 psychological
AUDCAD has had a sustained sell-off ever since the RBA surprised the market with its rate cut. That said tuesday turned into a bullish harami suggesting we may be heading higher, poised to cover the gap between prices and EMA lines in mean reversion. Daily indicators has stochastic coming off oversold areas while macd is still heading lower. Intraday we are seeing a double bottom with its immediate trigger at 1.0096, break of which could see us start the mean reversion, 21D EMA is at 1.0284. From indicators we have a confluence of buys in 4H charts with a bullish divergence in stochastic and new bullish cross from macd. Hourly charts has stochastic overbought and macd on the rise. Note we have data coming out at 0130GMT which could be a catalyst for a stronger AUCAD. Strong results in Wage price inflation ought to trigger the bullish reversal pattern.
Source: http://www.fxinstructor.com/blog/asian-session-notes-51513-aussy-pairs-at-the-brink-of-a-pullback
