Asian Session Notes 01/21/13

GBPUSD

Resistance: 1.5784 minor / 1.5825 strong / 1.5852 minor

Support: 1.5745 moderate / 1.5707 minor /1.5653 moderate

Cable managed to trigger its weekly scale double top by closing under 1.5825 Friday. At this point we have weekly and daily indicators showing a confluence of bears with stochastic in the latter pushing back to oversold levels. Note the UK has entered into a triple dip recession raising the risk of a credit down grade and calls for a weaker currency. At the open we had Wellington market makers gapping the pair lower with a possible continuation gap in the making as hourly indicators show a confluence of bears with stochastic just pushing oversold along with a new bearish cross in macd. From the 4H picture we have a confluence of bears in the making. The preferred course of action is looking for shorts under on a close under 1.5745, with the projected low at 1.5691. Alternative entry will be shorts off 1.5784 and 1.5825.

EURUSD

Resistance: 1.3491 strong / 1.3510 moderate / 1.3550(58) moderate

Support: 1.3450 minor / 1.3406 moderate / 1.3382 minor

Following Friday’s bullish breakout we have EURUSD just under the 50 Fib level of our sell-off from 2011 at 1.3491 a strong resistance area, given a previous weekly rejection from said levels in February 2012. With the breakout we have daily stochastic overbought and macd opening up though we need a daily close above 1.3491 first before we can press the buy side. Intraday we have mixed signals from both 4H and hourly macd’s and stochastic. For now we prefer remaining sidelined with an option to buy on dips to the 1.3405 breakout point. A limited short may be taken on a push under 1.3450. Note Euro’s rally appear to be driven by sentiment of normalization as the credit crisis pass from the stage of funding issue to actually growing the economy with the ECB no longer showing a dovish bias.

GBPJPY

Resistance: 144.28 moderate / 144.80 moderate / 145.17 minor

Support: 143.41 strong / 143.06 minor / 142.50 moderate

As with the other Yen crosses GBPJPY pushed higher Friday though failing to generate new highs keeping a pattern of lower highs and lower lows. Among indicators we continue to have an overbought daily stochastic while macd remains under the signal line, we may be forming a multiple top. In intraday charts we have 4H stochastic coming off overbought levels while macd is topping out with price action seeing an ongoing a break of 143.41. Hourly charts for their part have a confluence of bears with macd’s heading lower and stochastic poised to push oversold. Look for a close under 143.41 in the hourly charts to trigger a move to our daily multiple top break out point 139.58. Note GBPJPY appears to be caught between the broadly weaker Cable and Yen though for now CSPI figures earlier should help drag the pair lower.