Recapping the Majors
EUR/USD– After briefly retreating for 2 days, the Euro once again rallied past the 3600 mark after the existing home sales report showed its biggest plunge since 1989. The Euro had settled down to 3550 early on but found support at the 50 EMA on the 4hr chart and was able to rally back above 3600 where it is currently trading around 3630.
Result: The Euro erased the 2 day gains made by the dollar and once again shot back above the 3600 mark.
GBP/USD- The Cable once again stayed quiet although it floated slightly lower. The pair has been fighting back and forth but it always seems to end up right at the 2.0000 mark. By today’s price action, it shows us that the market still can’t decide whether or not to fall back below 2.0000 or rally higher past the 2.0100 mark which is a 15 year high.
Result: The Sterling once again stayed put as hit started and finished the day right around 2.0000
USD/CHF- The Dollar dropped significantly against the Swissy and lost all of the gains it made in the last 3 days. After piercing through the 2100 level yesterday, the Swissy was able to push the Dollar back below 2100 and throughout today, drove it all the way back near 2000 before settling right around 2020.
Result: The Swissy erased the gains the Dollar had made the previous 3 days and once again brought it back near the 2000 level.
USD/JPY- Once again the USD/JPY consolidated for the 3rd straight day. After a sharp drop below 118.00 the pair has been hovering right above 118.50 and has not made any significant gains or losses. The market is showing alot of indecision and I would expect to see a big move in the near future.
Result: The Yen once again stayed put for the 3rd consecutive day.
Chart Analysis: What’s going to happen next?
Although the Euro has once again pushed past the 3600 mark, I still think the pair will have a hard time making any significant gains past 3650. 4hr stochastics are trending up and are about to enter overbought territory so we could still a short term continuation of this rally. However, daily stochastics is, and has been in overbought territory since April 11th, and I think we will eventually start to see the pair drop. Look for the Euro to rise up to around 3650, but I would expect the pair to hold there and fall back down towards 3600 or even 3550.
The Sterling is still holding support at 2.0000 but I am still bearish on the pair. Although the pair has been closing above 2.0000 for the past 4 days, we are seeing lower highs on the daily chart. Daily stochastics are also trending down and are just leaving overbought territory. We may see the pair rise slightly in the short term as 4hr stochastics are still trending up but overall I still have a pretty strong bearish sentiment on this pair in the medium term.
The Swissy pulled a total 180 as it once again pushed the Dollar lower and right back near the 2000 mark. 4hr stochastics have headed into oversold territory and daily stochastics has crossed down after previously trending up. Right now, I’m kind of fuzzy as to where I think we’ll see this pair go. The 2000 mark makes for a good support level as the price hasn’t been that low since December 2006. If the pair does break that level, then I don’t see another support level until around the 1850 mark which means we could see a big downtrend if the 2000 support doesn’t hold. For this reason I think that there will have to be a pretty good fundamental reason for the pair to drop this low and I think that unless we see a very strong fundamental catalyst, we should see the 2000 support level hold. With that said, I think we may see the pair drift slightly below 2000 but I think we will see yet another bounce back towards the 2100 mark.
The Yen is moving very sideways right now. For the past few days the pair is opening and closing right above 118.50. With all this consolidation I would expect to see a pretty good breakout, but I’m not sure which direction. 4hr and daily stochastics are now moving sideways and it’s hard to really get a good sense as to where the pair might go. I can tell you that the 100 and 200 SMA on the daily chart are forming a nice upper and lower bound channel for the Yen and if the pair can make a good break of one of these borders, then look for the price to continue in that direction.