Asian Session Notes Feb 05, 2013

GBPUSD

Resistance: 1.5762(67) moderate / 1.5792 minor / 1.5846 moderate

Support: 1.5743 minor / 1.5740 minor / 1.5690 minor

Cable has seen a 38.2 Fib retracement of its huge sell-off from Friday with daily indicators now seeing a bullish cross in macd while stochastic is also at reisk for a bullish crossover. We appear to have a double bottom forming with mean reversion risk also turning out. Looking at the calendar we could have a catalyst for further gains should we see a stronger than expected read in the CIPS Services Index with consensus forecast just under the boom/bust line at 49.8. In the lower time frames we have stochastic just overbought while macd is trying to cross up in 4H charts though candlesticks appear to have a possible hanging man. Hourly charts in-turn has stochastic poised to cross up while macd is rising. For now we prefer remaining sidelined until the European open though a close above 1.5762(67) open the way for a daily double bottom to form. Should we remain under the 38.2 by European morning trade we will be looking for a bear market.

EURUSD

Resistance: 1.3540 minor / 1.3580 minor / 1.3619 minor

Support: 1.3487(00) strong / 1.3461 minor / 1.3435 moderate

Monday saw a huge sell-off in Euro following the Friday shooting star with prices nearing the end of its mean reversion as the 21D EMA is now in close proximity. Daily indicators has macd’s poised to cross lower while stochastic is dropping and prices are just around a strong support region from 1.3487 to 1.3500. From the 4H picture we have a confluence of bears with stochastic oversold and macd dropping though momentum has been lost with candlesticks forming hammers. Hourly charts for their part has mixed signals with stochastic oscillating around 20 currently off it heading up while macd is bearish. We are nearing the pattern target of yesterdays hourly double top 1.3455. For now we prefer remaining sidelined as intraday action chew on the strong support area. This could eventually form a base from which Euro may bounce.

EURJPY

Resistance: 124.62 minor / 125.12 minor / 126.00 minor

Support: 123.87 minor / 123.16 strong / 122.53 minor

After a sharp sell-off in European markets and equally bearish US equities we saw the Yen pairs easing off across the board with EURJPY leading the way. With this daily indicators now have stochastic coming off overbought levels while macd is also topping off. Note this could be the start of a mean reversion given the large gap between prices and the daily EMA lines. In the lower time frames we have a confluence of bears with stochastic oversold and macd’s heading lower candlesticks remain bearish. Hourly charts for their part has mixed signals with stochastic coming off oversold areas while macd is heading lower. Despite overall bearish bias we prefer remaining sidelined for the moment waiting for the hourly stochastic, should it eased back down under 20 we will view this as a confirmation of a bearish intraday trend for 122.84 our moderate support just under the projected low of 122.99.

AUDUSD

Resistance: 1.0456(66) moderate / 1.0476 moderate / 1.0492 minor

Support: 1.0439 minor / 1.0415 minor / 1.0395 minor

Aussy manage to start the week with a firm note pushing for the daily EMA lines. Earlier we saw better than expected numbers from the quarterly HPI and TRade balance sparking the current attempt to push up while we have an interest decision at 0330GMT. Note that with these firmer numbers the RBA may drop is previous dovish stance a move that could push Aussy through the daily EMA lines. Daily indicators has stochastic heading up, macd is at risk of crossing while a push past the EMA lines would trigger a daily double bottom. Intraday we have stochastic overbought in both hourly and 4H charts while macd is also heading up for a confluence of buys in both time-frames. For now we prefer waiting for the RBA to provide further incentive at pushing AUDUSD towards the 1.0500 psychological area.