Asian Session Notes 10/19/12: A calm before the storm from EU Summit

EURJPY

Resistance: 103.85 minor / 104.13 minor / 104.41 moderate

Support: 103.44 minor / 103.04 minor / 102.63 moderate

After seeing new highs just at the open of the US market we saw EURJPY closing with a ‘High Wave Doji’ for Thursday suggesting a possible top may have been reached. Note we also see a huge difference between prices and the daily EMA lines opening the possibility of mean reversion. Indicators for their part has stochastic overbought while macd is pointing higher. In 4H charts we already gave a bearish divergence out of stochastic while macd has just crossed lower. Hourly charts for their part also has a confluence of bears with stochastic just crossing lower coming from overbought areas. Immediate risk calls for a bear market with possible shorts off 103.85 which incidentally should also form the right shoulder of an hourly head and shoulder pattern.

NZDUSD

Resistance: 0.8205 minor / 0.8231 moderate / 0.8252 minor

Support: 0.8174 minor / 0.8145 moderate / 0.8108 minor

After all the action in the last three days we have NZDUSD back inside the inner range of the congestion for the last two weeks or so. Following Tuesdays false bearish breakout Thursday gave us a qualified ‘Dark Cloud Cover’. Among indicators we have macd’s bottoming out while daily stochastic is poised to cross lower. From the lower time frames we have a confluence of bears in 4H charts with macd topping off and stochastic heading for oversold levels. Hourly charts for their part also has a bearish macd and stochastic with a new bear cross. Immediate risk calls for a test of the support but with prices back inside a congestion we prefer looking for rejections from at least 0.8205 as our entry.

AUDUSD

Resistance: 1.0381 minor / 1.0411 minor / 1.0431 minor

Support: 1.3053 minor / 1.3031 moderate / 1.0288 moderate

Thursday saw Aussy with a high wave candle suggesting a top may have been reach though indicators still see an overbought stochastic and rising macd line. In the lower time frames we have a confluence of bears in the making for 4H charts with macd’s poised to cross lower while stochastic is pointing for oversold levels. Candlesticks from yesterday are a series of spinning tops and doji’s. Hourly charts for their part has a bearish macd with stochastic poised to cross lower. Immediate risk calls for a bear market though with 1.0330 a moderate support and 55D EMA we need an early close below the said price or risk a bouncing coming off it.

GBPUSD

Resistance: 1.6083(88) moderate / 1.6118 minor / 1.6174 moderate

Support: 1.6025 moderate / 1.5975 minor / 1.5959 moderate

Cable saw a follow through sell-off to its ‘Shooting Star’ from Wednesday taking prices back inside the daily EMA lines. This reinforces the idea of a lower highs and lower lows setup in the daily charts for the past month. Daily indicators has stochastic now heading lower while the macd is also heading back down after failed attempts to cross higher. In the lower time frames we have a confluence of bears in 4H charts with stochastic oversold and macd’s heading lower. Hourly charts for their part are mixed with macd’s heading down and stochastic coming off oversold areas while candlesticks are generally indecisive in the intraday scale. For now we see no sense of urgency suggesting we look for shorts from under the 21D EMA at 1.6083(88). A close under 1.6025 may also be seen as a bearish entry.

EURUSD

Resistance: 1.3085 minor / 1.3116 minor / 1.3140 minor

Support: 1.3060 minor / 1.3019 minor / 1.2991 moderate

Thursday saw Euro easing off to close with an ‘Evening Star’ pattern among the daily candles, given the gap between prices and the EMA lines this opens the possibility of mean reversion in progress. Among indicators we have daily stochastic coming off overbought levels while the macd indicator remains bullish. Intraday we have a confluence of bears from the 4H level with stochastic already oversold while macd is dropping. Hourly charts for their part has a bearish macd with the stochastic poised to cross lower. Overall bias for Euro has turned bearish, we prefer looking for a close under 1.3060 to confirm the bearish tone, a rejection off 1.3085 may also be seen as a bearish entry.