Asian Session Notes 3/5/13

EURUSD

Resistance: 1.3042 moderate / 1.3084 minor / 1.3120 minor

Support: 1.3000 psychological / 1.2966 moderate / 1.2938 minor

Euro saw limited ranges monday though prices closed near their hangs with a clear bounce off the 1.3000 psychological support level. Daily indicators has macd heading lower while stochastic is forming a bullish divergence. Note we have a big gap between prices and the EMA lines opening the possibility of mean reversion. In the lower time frames we have stochastic overbought and macd beginning to open up while prices are just under 1.3042 with the charts showing a double bottom break out in progress. Hourly charts has stochastic coming off overbought levels while macd is rising. For now we have a bullish bias though we prefer going long only on a close above 1.3042 or coming off the 1.3000 area with stops under 1.2966. At this point we should note that nay Euro upside will be limited given the Italian election results which has brought back the debt issue for the Eurozone.

USDCAD

Resistance: 1.0265 minor / 1.0307 moderate / 1.0341 minor

Support: 1.0241 minor / 1.0217 moderate / 1.0199 minor

Following Friday’s ‘Dark Cloud Cover’ we have an ‘inverted hammer’ in the daily charts for USDCAD with the long wick suggesting we look for a pullback to the daily EMA lines. Today’s calendar may be clear for the Loonie though we have an interest rate decision Wednesday. Among indicators we have a bearish divergence from stochastic while macd is looking poised to cross lower at the daily level. Intraday we have a descending or ‘double top’ in 4H charts with stochastic oversold and macd dropping. Hourly indicators has stochastic under 20 while macd is heading down. For now we have just pushed under the 1.0265 trigger though the previous hourly candle is a hammer. Given the contradicting developments in price action we prefer seeing USDCAD stay under 1.0265 for a while before committing to the sell side of the market.

AUDUSD

Resistance: 1.0223 minor / 1.0240 minor / 1.0273 moderate

Support: 1.0184 moderate / 1.0149 strong / 1.0115 minor

Monday saw Aussy reversing earlier losses from Asia to end up with a long tail in the daily charts, opening the possibility of mean reversion. Among indicators daily macd has bottomed out while stochastic is pushing higher. From the calendar we have just seen an upside surprise out of the Retail Sales figures at 0.9% up from -0.2% and more than twice the consensus forecast of 0.4%. Going forward we are waiting for a possibly optimistic statement from the RBA in its latest Rate Statement at 0330GMT. In intraday charts we have a bullish view with 4H macd’s just crossing up while stochastic has also just pushed to overbought levels. Hourly charts for their part has stochastic oscillating around 80 inline with the rising macd to suggest a bullish trend. For now we are looking for a rally to the 21D EMA at 1.0273. Consider a buy on dips to 1.0184 or on apush past the 61.8 Fib retracement at 1.0223.