Here is the technical summary of what happened today in the majors:
EUR/USD– After some heavy battle, the Euro finally found some support at its 50 EMA on the daily chart and was able to supress the Dollar’s charge today. The Euro fought valiantly and edged the Dollar lower to around 3122 compared to yesterday’s close at 3093.
Result: The Euro support held strong and pushed the Dollar back slightly. Will this support continue to hold?
GBP/USD- The Sterling was also able to repel the Dollar’s charge today. At first the Dollar made an early surge and brought the Sterling down to 9184 but the Sterling fought back hard and rallied to as high as 9321. The pair closed at 9312 which is 91 pips higher than yesterday’s close. This is the first battle the Sterling has won in 3 days.
Result: The Sterling makes a late rally and keeps the Dollar at bay. Clear victory for the Sterling!
USD/CHF- The Swissy once again could not compete with the Dollar’s strength. The pair edged to as high as 2254 and ended up closing at 2240, which was 31 pips higher than yesterday’s close.
Result: The Dollar once again defeats the Swissy!
USD/JPY- The psychological support at 115.00 held strong as the Dollar finally pushed the Yen back. The Dollar rallied to as high as 116.72 agains the Yen and ended up closing 78 pips higher than yesterday.
Result: The Dollar makes a nice comeback and clearly defeats the Yen!
Chart Analysis: What’s going to happen next?
The Euro looks like it could still fall despite the nice rally it had today. Daily stochastics are still trending down and the pair faces some pretty good resistance at around 3150 because that is where the 50 EMA and 100 SMA are on the 4hr chart. The price is currently around 3122 and 4hr stochastics are still trending up so the price may rise to 3150 (resistance) and then fall from there.
The Cable shows a good probability that it will rise to at least its 38% Fib line. 4hr stochastics are trending up nicely and daily stochastics look like they are about to cross up. Daily stochastics are also in oversold territory. Look for the pair to rally to around 9375 tomorrow.
My Swissy trade is currently positive but we’re still a long ways away from our target at 2300. I still think the pair will go up since daily stochastics are still trending up and have plenty of room to go before reaching overbought territory. I think we may have to weather some retracement though since the 4hr stochastics are in overbought territory. The pair is also facing resistance at the 50 EMA on the 4hr. chart. I will continue to hold this pair since I still have a bullish bias on it. If you missed yesterday’s post, here was my trade idea:
Buy USD/CHF at market (around 2204); Stop Loss= 2100; Target= 2300
Today’s Dollar rally vs. the Yen has caused the 4hr stochastics to extend into overbought territory which means we could see some retracement in the short term. However, daily stochastics have crossed up and are in oversold territory which indicates that we could see a longer term rally. I think we could see the pair range between 116.00-116.50 tomorrow.