Comments: As we approach the last trading day of the month and quarter, signals suggest caution. As such, we recommend remaining square today. Below is our FX Majors’ Sentiment Analysis for your consideration.
Contrary to yesterday’s bearish outlook, a sequence of 3 down days ended with profit taking. This demand was attracted at marginally higher levels than Wed’s 6 week low and was not extensive. Nonetheless, most of Wednesday’s net fall was regained and although the move is assessed as counter-trend, it is incomplete. Therefore, with some caution, Friday’s call for this morning is a Temporary Buy from 7am but leaving room to also Buy any Dip to 1.1744, yesterday’s open.. The risk is this week’s 1.1717 low with an immediate target of 1.1804, yesterday’s high. A move through that point then exposes sentiment to 1.1822, Tuesday’s Marabuzo line, and 1.1855, the 13 day mvg avg.
The most negative levels traded for 2 weeks were poste din early trading Thursday. But, as expected, the market was unable to sustain prices beneath the key 13 day mvg avg. The resulting renewal of investor demand was not extensive but CABLE again closed above the 13 day line and we look for the underlying positive tone to reassert. With this as a backdrop and despite some minor Asian losses, this morning’s call is a Cautious Buy from 7am but leaving room to also Buy any Dip to 1.3387, intraday Marabuzo line. The risk is 1.3358 with an immediate target of 1.3445, Asian high. A move through that point then exposes sentiment to 1.3488 and 1.3515, Tuesday’s peak.
The rally from this week’s 2 month low extended yesterday, marginally further than expected. But levels above .8800 and short of Monday’s Marabuzo line attracted fresh selling interest. In quiet trading this only resulted in minor net movement but the weakness of rally attempts places our technical focus on the downside. With this in the background, this morning’s call is a Sell but leaving room to Sell any Rally to .8797. The risk is .8824, Monday’s Marabuzo line, with an immediate target of .8756, the 200 day mvg avg. A move through that point then exposes sentiment to .8743, July’s low, and .8724.
Thursday’s signals for USDJPY continued to point higher and to buying the dip at 112.75. Contrary to this view however investors have taken profits and sold the market, sentiment deteriorating by a modest 36 pips on the day. This is only mildly negative as the pullback is potentially corrective with prices remaining above their 200 day average rate and extending a sequence of higher daily lows. However, for Friday there remains a negative bias, but cautious to start with the call is to stay square on the open and to sell the rally at 112.90 with a stop loss at 113.35, just above this week’s high trade, or to sell down through 112.16, a 62% pullback to this week’s gains with a stop loss at 112.65. Targets below 112.16 are to 111.57, this week’s low and 110.80, last week’s base.
Bearish signals for EURJPY on the week have been confirmed with Monday’s strong sell-off. However, with buyers tentatively returning to the market on Tuesday from close to a 50-62% pullback to September’s gains, but in the absence of a buy signal, yesterday’s outlook was to sell into strength. A strong Euro and a strong Yen dominated trading, but sentiment for this cross has improved, the market posting a 2nd higher daily low & high in a row, but remaining firmly inside Monday’s down-day. There may be further gains, but these should be temporary and the outlook for Friday is to stay square on the open and to sell the rally at 133.73, this week’s opening trade with a stop loss at 134.43, this month’s top, or to sell down through 131.74, this week’s low with a stop loss at 132.40. Targets below 131.74 are to 131.10 and 130.56, the 15th Sep base.
Trading in USDCHF was more subdued yesterday. Initial upside failed to retest Wednesday’s 7 week highs but the resulting profit taking failed to break below Wednesday’s low or test the Sep 20th Marabuzo line. So, although the market closed near the lows, all price action was confined within the previous day’s range. This ‘Inside’ day reflects uncertainty but, despite the proximity of the 13 day line, another upside rejection leaves our studies mildly negative. Therefore, this morning’s call is a Sell but leaving room to Sell any Rally to .9742. The risk is .9774, August’s peak, with an immediate target of .9688, Asian low. A move through that point exposes sentiment to .9671, the 13 day mvg avg, then .9642, this week’s bottom.
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