Daily Technical Outlook

Daily Technical Outlook

Mon, May 12 2008, 07:34 GMT
by William Basa

Global Market Research, Inc. (GMR)


OVERVIEW:

A mixed message coming out of last week, as the USD rallies vs JPY and Swiss are stalling (weekly trend fell neutral in $/JPY; setup points lower in $/Swiss), while weekly trends in Sterling and Euro are now bearish and point lower. The main focus centers on Sterling, where weekly trend/sell structure is at 1.9680/1.9730, and there is breakdown risk under May level at 1.9480. In Euro, the comparable weekly trend resistance is 1.5520/55. In $/JPY, weekly trend did fall neutral, but last week’s outside range should mute downside follow-thru – expecting a 104.12 to 101.91 week. $/Swiss is seen testing back to its May support at 1.0175.


JPY/USD

Weekly Outlook – Neutral. Weekly trend fell from bullish to neutral last week. The outside range on the weekly chart – combined with the initial May support at 102.59 – leaves a neutral setup. Supports are weekly/May zone at 102.68/59 and 101.91, with a second May level deeper at 100.73. Resistance is 104.12 and 105.53/66, with the Q2/May zone at 105.85/106.06. Daily trend is bearish under 104.05 today. Expecting a 104.12 to 101.91 weekly range. Will sell 104.05/12 (especially on Monday).

Daily Comments – Bearish to neutral. Daily trend is bearish – but with downside neutralized by both the weekly/May zone at 102.68/59 and high trend resistance. Below there is drop to 101.91 and 101.68. Resistance is well above closing levels at combined daily trend/weekly sell zone of 104.05/15. Projecting a 102.59 to 104.05 day – with some modest risk under 102.59.

Position Strategy:
Currently flat. On strength, move 50% short at 104.05/15 today – stop on close above 104.12. Day Trade: sell 104.05/15 and 104.46; cover day shorts at 102.68/59; buy dip to 101.91.


CHF/USD

Weekly Outlook – Neutral. Although weekly trend did manage to stay bullish here, Friday’s soft close near the weekly lows leaves a neutral to negative setup. Main resistance is 1.0430 to 1.0470 – plus bearish-leaning daily trend at 1.0505 – with jump above there to 1.0630. There are no supports until 1.0200 and the combined May/weekly extreme at 1.0175/70. Under there is drop to .9995. Projecting a 1.0470 to 1.0175 weekly range – but with a more neutral bias above 1.0470. Will set partial shorts at 1.0470/1.0505 Monday.

Daily Comments – Neutral to bearish. Daily trend can turn bearish with settle under 1.0505 today. The day setup points outright lower. Resistance is day/weekly zone at 1.0415/30, second weekly level at 1.0470 and 1.0495/1.0505 trend. There is no support until 1.0285. Expecting a 1.0430 to 1.0285 day range.

Position Strategy:
Currently flat. On strength, move 25% short at 1.0470; 50% at 1.0505. Stop on close above 1.0505. The target is 1.0200/1.0175 this week. Day Trade: be better seller at 1.0430, 1.0470 and 1.0495/1.0505; day target is 1.0285.


Pound

Weekly Outlook – Bearish. Weekly trend is bearish and the setup for the week points lower. Resistance is 1.9605, 1.9680 and bearish trend level at 1.9730, before upside jumps to 1.9905. Bearish daily trend is also at 1.9550 on Monday. The lone nearby support is the May breakdown zone at 1.9480. Although it held Friday, there remains a drop-off under there to 1.9290 for the week and 1.8975 for Q2. Expecting a 1.9680 to 1.9290 weekly range. Will scale into shorts at 1.9680/1.9730, or on weakness with break/close under 1.9480.

Daily Comments – Bearish to neutral. Today’s setup is a battle between bearish daily trend – at 1.9550 today – versus the May breakdown level at 1.9480. Under there is day support at 1.9410, then drop to 1.9290. Resistance is 1.9530/50 and first weekly level at 1.9605. Looking for a 1.9550 to 1.9410 day range.

Position Strategy:
Currently flat. On strength, move 25% short at 1.9605; 75% short at 1.9680; 100% short at 1.9730 – stop on close above 1.9730. On weakness, move 50% short on close under 1.9480 (limit 1.9440).


European Currency

Weekly Outlook – Bearish to neutral. Weekly trend did turn bearish last week, but failed to break under bullish monthly trend at 1.5345. As a result, the initial setup for the week is neutral with the same battle between time frames as last week. Resistance is 1.5495, 1.5520 and weekly trend level at 1.5555. Above there is gap to 1.5810/30. Main support is the May trend at 1.5345, with drop under there to 1.5190 and May level at 1.5125. Based on the weekly downtrend, projecting a 1.5555 to 1.5190 week – but with risk above 1.5555. Will sell 1.5520/55 for 1.5190/25 target.

Daily Comments – Neutral. Daily trend did turn neutral from bearish with Friday’s rally. But the trio of weekly levels at 1.5495, 1.5520 and the 1.5555 downtrend makes for a neutral setup. Day hurdles are also at 1.5505 and 1.5555. Day supports are 1.5445 and 1.5465/50. Expecting a 1.5505/20 to 1.5365 day range.

Position Strategy:
Currently flat. Will reset to 25% short at 1.5495/1.5505; 50% short at 1.5520; 75% short at 1.5555. Stop on close above 1.5555. Day Trade: sell 1.5505 and 1.5520; cover day shorts at 1.5445.

Published on  Mon, May 12 2008, 10:39 GMT

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Global Market Research, Inc. (GMR)  | Montpelier, Vermont
http://www.globalmarketresearch.com | FXTechinfo@globalmarketresearch.com

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