Asian Session Note: 2/18/2013

AUDJPY

Resistance: 95.00 moderate / 95.55 minor / 95.98 minor

Support: 94.56 minor / 94.09 minor / 93.52 minor

AUDJPY has seen two consecutive hammers the past two days suggesting that the sell-side is losing steam. Among indicators we have daaily stochastic beginning to cross up though macd remains bearish. In 4H charts we have a confluence of buys with macd crossing up and stochastic overbought. Hourly charts has stochastic oscillating around 80 while macd is pushing up. For now we have prices just around the 50 fib area of the sell-off from monday. Note we are looking for a further surge up following the Japanese PM’s announcement of Kuroda as his choice for BoJ governor at 0200GMT. Consider buys above 95.00 on confirmation of a Kuroda appointment.

EURJPY

Resistance: 122.25(28) moderate / 122.71(81) moderate / 123.64 minor

Support: 121.22 minor / 120.40 minor / 119.71 minor

With long tails sticking out beneath the 55D EMA for the daily candles this week we have EURJPY surging yesterday following the hammer from Tuesday. Note we could consider this a bounce off the 23.6 Fib area 119.79 for the rally from July last year. Daily stochastic has just crossed up while macd is pointing lower. From the lower time frames we have macd’s crossing up and stochastic pushing overbought in 4H charts. hourly indicators have reentered overbought areas while macd is rising. Price action has an hourly flag pattern triggered at the open of Asian markets. For now we are just waiting to confirm Kuroda’s nomination for BoJ governor a catalyst for weaker Yen given his views on inflation targeting and monetary easing. Look for a buy on dips to 121.22 with averages ranges suggesting a 124.24 target though we expect to be well resisted at 122.28(28) and 122.71(81).

EURUSD

Resistance: 1.3160 minor / 1.3203 minor / 1.3265 strong

Support: 1.3120 moderate / 1.3071 minor / 1.3038 minor

The high wave doji from Tuesday in Euro lead to a strong rally yesterday for a morning start in our daily candlesticks. Note we have this bounce off the 38.2 Fib retracement of the rally from July of 2012. Daily indicators has stochastic coming off sharply from oversold territory while macd is bottoming out, with the daily EMAs as our target for the mean reversion though trends have shifted with dead crosses forming. In the lower time frames we have stochastic overbought and macd beginning to push higher in 4H chrts though hourly indicators are mixed as stochastic comes off overbought area while macd remain bullish. At this point the shock of Berlusconi should be passing though the European debt issue is back to fore suggesting no new highs, no new push to the 1.4000 level. We are looking for a buy on dips to 1.3120 or on a push past 1.3160.