SRO- Analysis
| 13 February 2012
USDJPY
The BOJ's annoucement of increasing its Long term JGB & asset purchases by Y10T; have made the Yen prices well offered in todays forex trading sessions. This has led the USDJPY to move higher, while yen value declines due to the move to increase QE measures. This is certainly BOJ's strategy of staying as competitive as exporters suffer from a stronger yen at these levels. Although, risk negative; the Yen has maintained its gradual decline instead of a rapid intervention which everyone has been so used to having at a certain price levels where the BOJ intends to come in. This way BOJ have found an indirect strategy that would benefit them more which obviously have been learned from the QE initiatives by the US to help boost the economy. The long term consolidation period would lead to breaking through its trading range between 79.00 - 75.50 levels, once an aggressive stance would be taken and the effectiveness of this monetary easing by Japan would continue to see the underperforming price levels of the Yen in no time more importantly in a smoother pace as perceive by the BOJ.
EURJPY
The EURJPY has recovered from it daily corrective move and is currently back at the highs of 102.75. The corrective low at 101.80 was well supported and in line with the EURUSD 1.3144 correction dated the 13th of February and is working at the 1.3200 recovery levels. while the daily directional move of the USDx has helped the USDJPY to gain some ground and is moving back higher above the 78.00 1st resistance levels that has prompted to support the EURJPY cross currently above the 103.00levels. The price adjustments likewise helped some traders to regain back some trade footing with fresh momentum and volumes have emerged while volumes are slowly increasing towards the mid-week's trading activity.
The daily candle bars as shown on the chart depicts the spread between bulls and bears are just about even while waiting for other fundamentals in the news wires regarding the Euro. For now the similar drawbacks are only expected on a day to day and trading session to session basis while the directional trend for the EURJPY & GBPJPY crosses is still within its upward trend. Suport1 levels are seen at 101.60 while it stays above the 21 day MA of 101.20. This justifies maintaining our position of Feb 2, 2012 as prices would continue to move gradually at a better pace while building momentum after the 2 day correction along side with the corrective move of the EURUSD. Otherwise, the USDJPY may well bid the prices higher inline with the corrective move higher of the USDx currently working at the 79.20 basis point levels. Any price above the 79.50-80.10 USDx resistance would trigger the cross rates to further its advance.
AUDUSD
The daily technical outlook for the Aussie dollar indicates a daily 'Harami candle formation signifying a bullish pattern which was supported with the recent upward move towards the 1.0777 leve, after the correction to the 1.0638. Although, the recent high at the 1.0843 was an extension price above our objective dated the 26th of January Market view reportt; considered a new high defining an uptrend has been established.
The contradiction would be a weekly formation that defines a spinning top signaling a probable correction is in sight. As some of the analyst have stated that the AUDUSD is a step away from a possible reversal. price wise could be a probability but trend wise its not. Of course, otherwise proven to be wrong. An indecision could have been seen as the market in itself has been quiet for the opening trading day. The market behavior for the Aussie may well be simply a pause with a tight daily range before a resumption would be made towards the upward direction. Currently its slightly above the 21day MA of 1.0635 and otherwise the direction changes lower the support would be at 1.0540/50 levels within another rising channelstill intact.
GUIDE FOR CANDLESTICK INTERPRETATION: Spinning Tops are depicted with small bodies relative to the shadows. This demonstrates some indecision on the part of the bulls and the bears. They are considered neutral when trading in a sideways market. However, in a trending or oscillating market, a relatively good rule of thumb is that the next days trading will probably move in the direction of the opening price. The size of the shadow is not as important as the size of the body for forming a Spinning Top.
EURO
The active pullbacks across the board last Friday's closing were expected as the market sentiments and price action would continue its near term trend for the week. Liquidation and some short-covering actions were present during the week ending of the 10th of February that may prove to continue towards this week's trading activity.
On the technical side, the previous low of 1.3025/27 serves as the back drop of a double bottom price that likewise triggered some short covering as the prices rallied above the 1.3250/80 1st resistance with a registered high at 1.3320 which would be re-tested with this 3rd trading week of the month. Some drawbacks may stale the Euro prices versus the GBPUSD trying to keep pace. However, the end-result would eventually be the EURGBP cross rate would move higher with daily corrective moves that may have some influence contrary to this outlook. Whenever, the GBPUSD daily corrective move would support the rise of the EURGBP cross otherwise any negative fundamental for the Euro to move lower would then weigh more than the previous. We just have to watch the relative price behavior of these three majors for now.
EURGBP
The EURGBP cross maintains a positive tone after the Friday's move after the reports that would somehow spill over during the European opening sessions towards the US trading sessions. Opening with a 20 pips spread may not be enough as it moves forward to the European session would prove to be a wait and see attitude for some traders if such follow through would not arise. Although, the current price of 0.8390 is just within breaking out from the trading range of 0.8400 and 0.8265 low. Pivotal price still remains well with the 0.8290 -0.8330 as prices have reflected a higher bottom within a rising channel as of this analysis. Take note that the daily candle bars are intra-day and week bars refelcting a pause and timely and temporary break upwards would eventually take place otherwise contradicted with fundamental reports from the Euro zone. The length of the consolidation range would equal to the breaking point whenever it does penetrate this resistance levels. The mid-term outlook would be such move higher will eventually phase out and move back to its original long term down trend that may take some time for an actual trend reversal.
