Daily Technical Outlook

Daily Technical Outlook

Fri, May 16 2008, 06:24 GMT
by William Basa

Global Market Research, Inc. (GMR)


OVERVIEW:

In terms of the front and center trades, the focus is on Sterling and $/CAD. Though the pace of the decline in Sterling has been somewhat inconsistent, the downtrend has done nothing wrong. Staying under 1.5485 keeps weekly trend bearish and the setup for next week open-ended lower to May support at 1.8975. Same story in $/CAD, where bearish weekly trend (1.0093) and open-ended risk under 1.0013 points to its May support at .9782. $/JPY remains neutral, with Q2/May sell zone at 105.85/106.06; the comparable sell zone in $/CH is higher at 1.0735/65; Euro needs to get out5side 1.5620 or 1.5345/40 to move.


JPY/USD

Weekly Outlook – Neutral. Weekly trend is going to stay neutral here, as is the weekly setup. Resistance for next week is forming at 105.32, plus the still present Q2/May sell zone at 105.85/106.06. Supports for the week are 103.17, May level at 102.598 and 101.29. Daily trend is also still bullish, but can turn neutral under 104.74 today. Nothing too sexy here – still looking for 105.85/106.06 to 102.59 range trade. Will set shorts on push to 105.85/106.06.

Daily Comments – Bullish to neutral. Daily trend is still officially trend up from Wednesday, but offset above by weekly/longer-term resistance. The day setup is neutral. Resistance is 105.15, developing weekly level at 105.31 and Q2 sell level at 105.85. Supports today are 104.46, 104.19 and 103.61. The uptrend ends under 104.74. Expecting a 105.15/31 to 104.19 day.

Position Strategy: Currently flat. On strength, will wait to move 75% short at 105.85/106.06 – stop on close above 106.06. Day Trade: sell 105.19/31 and 105.85/106.00; cover day shorts at 104.19 and 103.61.


CHF/USD

Weekly Outlook – Neutral. $/Swiss has managed to hold above the level that keeps weekly trend bullish at 1.0410 this week. But the inside weekly range leaves a non-committal, breakout-type setup forming for next week. Weekly resistance is 1.0585, with effective jump above there to the May/Q2 sell zone at 1.0735/65. Main support is forming at 1.0390, before drop-off to the monthly base at 1.0175. No change in strategy at this point – until weekly trend falls neutral, will wait to sell a thrust to 1.0735/65.

Daily Comments – Bullish to neutral. Daily trend did turn bullish Thursday. But the developing weekly hurdle at 1.0585 makes for an initially neutral setup. A key day level is also at 1.0580/85, before jump to 1.0665. Supports today are 1.0480 and 1.0455, with daily uptrend at 1.0535. Expecting a 1.0480 to 1.0585 day range.

Position Strategy: Currently flat. Will move to 50% short at 1.0735/65 – stop on close above 1.0765. Day Trade: sell against 1.0580/85; go with action above 1.0600; cover day shorts at 1.0480 and 1.0455.


Pound

Weekly Outlook – Bearish. Although Sterling is declining at a begrudging pace, the trend has done nothing wrong. Weekly momentum will stay bearish and the setup for next week is openended lower under 1.9480/85. The closest fixed support under there isn’t until the Q2 level at 1.8975. Resistance above 1.9485 is developing weekly trend at 1.9635, then jump to 1.9815. Still looking for an eventual breakdown to 1.8975 target. Add shorts against 1.9485 today; if stopped, will reset at 1.9635 next week.

Daily Comments – Bearish to neutral. Daily trend is officially bearish, but with an initially neutral setup. Resistance is the weekly level at 1.9485 and 1.9510/15, then weekly trend at 1.9635. Supports are 1.9420 and 1.9335. Trend turns neutral with close above 1.9455. Projecting a 1.9510/15 to 1.9335 day range.

Position Strategy: Currently 25% short at 1.9605. Add to 50% short at 1.9510/15today – stop all shorts on close above 1.9485. If stopped, will reset at 1.9635. Day Trade: sell against 1.9485 and 1.9510/15; cover day shorts at 1.9335.


European Currency Unit

Weekly Outlook – Bearish to neutral. Weekly trend will stay bearish with any settle under 1.5555 today. But the inside range this week leaves a breakout-type setup for next week with risk seen outside initial boundaries to both sides. Weekly resistance is forming at 1.5545 and 1.5620, then jumps to 1.5855/60. Main support is May uptrend/weekly level at 1.5345/40, then drops to 1.5145/25. Based on the trend direction, still expecting a breakout to the downside. Hold existing shorts against 1.5620 for today; target still 1.5125.

Daily Comments – Neutral to bearish. Daily trend can turn bearish with settle under 1.5470 today. The setup is neutral to bearish. Resistance is 1.5470, 1.5520, and developing weekly levels at 1.5545 and 1.5620. Supports are 1.5390 and the day/weekly breakdown level at 1.5355/40. Expecting a 1.5520 to 1.5355/40 day range.

Position Strategy: Currently 75% short at 1.5525 average. Stop on close above 1.5620 today. The target to cover is 1.5125 May level. Day Trade: sell 1.5515 and 1.5545; cover day shorts at 1.5355/40.


CAD/USD

Weekly Outlook – Neutral to bearish. The situation is turning increasingly bearish here, as weekly trend will lean bearish under 1.0093 next week, and the setup is a hair from turning open-ended lower under 1.0012. Resistance for next week is forming at 1.0012 and 1.0090/93, before jump to 1.0211. There is no fixed support under 1.0012 until the May level at .9782. Daily trend is also bearish under 1.0026/28 today. Strategy is to add/hold shorts against 1.0093 for .9782 target.

Daily Comments – Bearish. Daily trend is still bearish, with larger downside than upside risk today. Daily trend intersects at 1.0026/28, with additional day zone at 1.0047/59 and weekly trend zone at 1.0090/93. Lone nearby support is .9990, before drop to .9917. Expecting a 1.0028 to .9917 day range.

Position Strategy: Currently 25% short at 1.0160/64 after covering ½ at .9958 on Wednesday. Reset to 75% short at 1.0090/93 developing weekly trend. Stop on close above 1.0100. The target is .9782 May level.


Australian Dollar

Weekly Outlook – Neutral. Whether or not weekly trend turns officially neutral with close under .9391 today, the setup for next week looks neutral and widespread. Resistance is forming at the May/weekly zone at .9472/92 and Q2 sell level at .9594. Supports are equally widespread at .9305, May uptrend/weekly zone at .9253/42 and .9120. Daily trend is neutral in between and not a factor today. Expecting a.9472/92 to .9253/42 range action over the next week. Will wait to sell .9594, however.

Daily Comments - Neutral. Daily trend turned neutral with the surging close Thursday. The day setup is neutral as well. Main resistance is the May/daily/weekly zone at .9472/73 to .9492, with .9532 above there. Supports are .9346, first weekly level at .9305 and .9278 day extreme. Expecting a range day from .9472 to .9346.

Position Strategy: Current flat. Will move to 50% short at .9594 – stop on close above .9614. Day Trade: sell against .9472/73 to .9492; cover day shorts at .9346 and .9305.

Published on  Fri, May 16 2008, 06:38 GMT

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

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