The Dollar wins against 3 out of the 4 majors

Well we had another day of weird trading again. The Cable pretty much whipsawed back and forth but somehow managed to close higher than its open. The Euro made another run towards 3200 but ended up falling back down before it could even reach it while the both the Swissy and Yen made promising gains early in the day only to retreat back. So with the exception of the Cable, the dollar came out the winner today. CPI could change the balance of this battle tomorrow so hang on to your seats!

Chart Analysis:

EUR/USD

Yesterday I gave a trade idea to short the Euro at 3130. The Euro started the day by rallying to 3177 and then finally dropping down to trigger my trade. The pair has pretty much stalled since then but I am still bearish on this pair and will continue to hold. Since I already had a bearish sentiment yesterday, I am feeling extra bearish now that the pair has made what looks like a last exhausted rally. If you missed yesterday’s post, here was my trade idea:

Trade Idea:

Sell at 3130; Stop Loss= 3160; Target= 3100; Target 2= 3080

GBP/USD

The Cable ended up rallying today after what seemed like a never ending see-saw battle. I mentioned that the pair faced resistance in between 9500-9600 because all 3 moving averages on the 4hr chart were right above the price. Well the Cable managed to break through its 200 SMA but fell after meeting its 50 EMA and 100 SMA. 4hr stochastics are still trending up which means the pair could still make another run up. Daily stochastics looks shaky as the fast and slow line are just staying flat. I’ve drawn a trend channel on the daily chart of the Cable and it looks like the pair could continue to move up to its upper trend channel line which "coincidentally" happens to be its 31% Fib line as well.

USD/CHF

The Swissy rose up to its 50 EMA on the 4hr chart where it then proceeded to bounce back down to around 2360. It’s in a similar situation as the Cable in that all 3 moving averages are bound together to form a somewhat strong resistance area for the pair. Previously, when the pair was above 2400, these moving averages were the big support area. The Swissy managed to spike to its 50 EMA and 100 SMA but ended up falling back down and is currently resting at its 200 SMA. However, daily stochastics are in oversold territory and have crossed up which means the pair could make another strong rally. The question is, will it be strong enough to break through this tough resistance area?

USD/JPY

Just like the Swissy, the Yen moved up to its 50 EMA on the 4hr chart where it met resistance. The pair has since fallen to around 120.00. 4hr stochastics are showing an extended period of being in overbought territory which means the pair could be headed down in the short term. However, daily stochastics are in oversold territory and have just crossed up which means we could see a medium term rally. My guess is that the pair will retrace to somewhere around 119.50 and then proceed to move back up. Tonight we have the BOJ interest rate statement and this outcome could determine the next medium term trend.