Recapping the Majors
EUR/USD– It turns out that the brief close above 3400 was just a knee jerk reaction as the Dollar was able to push the Euro back below that level. The pair briefly broke below 3350 but ended closing slightly higher at 3358. This was the 2nd straight day the Euro lost to the Dollar after the Euro rallied above 3400.
Result: The Dollar was able to hold resistance at 3400 and pushed the Euro back down below it, marking the 2nd straight Dollar gain against the Euro.
GBP/USD- The Sterling has been falling ever since it pierced above 9800 proving once again that 9800-9900 is a very strong resistance level. The pair fell for the 3rd straight day as it dipped below 9600 before finally closing slightly above it at 9615.
Result: The Dollar pushed the Sterling lower for the 3rd straight day as it fell to 9600.
USD/CHF- The Dollar once again rallied against the Swissy moving as high as 2282 before meeting resistance at the 100 SMA on the daily chart. Today’s rally marks a clean break of the 38% Fib line, but the pair is now testing that 100 SMA resistance.
Result: The Dollar rose for the 2nd straight day against the Swissy.
USD/JPY- Last Thursday the Dollar rallied hard against the Yen and broke the 119.00 barrier. Since then the price has remained still as traders may be deciding what to do after last weeks’ move. The Dollar had faced tough resistance at 118.50 but after breaking that barrier, the Dollar has gained nice bullish momentum against the Yen.
Result: The pair stayed relatively flat after the Dollar rallied against the Yen to over 119.00.
Chart Analysis: What’s going to happen next?
Now that the pair has eased off of the 3400 level, I am beginning to have some bearish sentiments towards the pair. Daily stochastics are clearly trending down and have plenty of room to fall before reaching oversold territory, but 4hr stochastics are in oversold territory at the moment and we could see a slight retracement in the short term. I would expect the pair to head back up towards 3400, but we should see the pair fall from that point.
I said last Thursday that if the pair could break 9700, then it would hit 9600. That’s exactly what happened. Now that the pair has hit 9600 will it continue to fall or will it rise from here? 4hr stochastics are trending up and are in oversold territory which indicates that we could see some short term bullish movement. However daily stochastics are still trending down and have some room before it reaches oversold territory. Like the Euro, I expect the Cable to have a brief rally towards 9650 followed by another drop back to 9600 or even lower.
Well my short Swissy idea didn’t work out as the pair rallied past its 38% Fib line. The pair is facing resistance at the 100 SMA and both 4hr and daily stochastics are in overbought territory. We may see slightly more bullish movement since daily stochastics have not crossed down yet but I think 2300 should be a good resistance level and we will probably see the pair fall from there.
The USD/JPY has been very bullish lately but it looks like the pair may be ready to turn back down. Both 4hr and daily stochastics are in overbought territory and the pair hasn’t really been moving higher since last Thursday. If the pair does move up, I would expect 119.50 to be a good resistance level. My overall sentiment is bearish and I think we’ll see the pair fall back to 119.00 within the next day or so.