EURUSD: Continues the slow grind higher in the bear correction phase

Daily Forecast - 24 January 2017

EURUSD Spot

EURUSD continues the slow grind higher in the bear correction phase. Holding above 1.0755/60 re-targets 1.0774 but gains are likely to be limited in severely overbought conditions now. I'm hoping (& I think we can) reach an excellent selling opportunity at 1.0820/30 where a high for the recovery is expected here. Just be aware that we do have more important resistance at 1.0870/75 (but I'm not sure we will reach this far, which is why our selling opportunity is a little lower). Bulls require a 2 day close above 1.0900 to signal they remain in control. Shorts need stops above 1.0910.

First support at 1.0715/05 is important short term as if we cannot hold above here it is likely we have already seen a high for the correction. The last line of defence for bulls is 1.0675/65. A break below here is an add sell signal initially targeting 1.0610/00 but there is scope for significant losses in to February so worth keeping a core short position.

GBPUSD spot

GBPUSD overbought but bulls are in control if we can hold above 1.2530/20. A break above 1.2545 targets 1.2566/70 & minor resistance at 1.2600/08. If we continue higher look for 1.2630/33 then 1.2655/59.

First support at 1.2530/20 but below here is less positive risking 1.2480/75 then 1.2445/40 but support at 1.2415/05 should hold the downside at this stage.

AUDUSD Spot

AUDUSD severely overbought so gains are likely to be limited at this stage so bulls must be cautious. However above 7600 targets 7633/36, 7643/46 & perhaps as far as 7693/98 this week.

We could top at any time in such overbought conditions to test first support at 7555/50. Further losses meet better support at 7500/7495 which should hold the downside at this stage until we see a sell signal.

USDJPY Spot

USDJPY tested & held last week's low at 112.50/55, where we suggested exiting any shorts. There are 2 scenarios here. Firstly this double bottom may mark a low for the correction now & the bull trend resumes. Secondly we trade down to strong support at 112.00/111.90 where a low for the correction is very likely. Try longs with stops below 111.50.

We should find bulls regrouping now. First resistance at 113.20/25 & holding here sees a retest of 112.50/55, which may not hold a second time and we then hopefully get our buying opportunity at 112.00/111.90. HOWEVER above 113.30 targets 113.66/70 then strong resistance at 113.96/114.00. This is the best chance of a high for the day. Shorts need stops above 114.30. **JUST BE AWARE THAT A BREAK ABOVE 114.10 IS A STRONG BUY SIGNAL TO CONFIRM A LOW FOR THE CORRECTION HAS BEEN MADE.**