Asian Session Notes 7/30/12

EURUSD

Resistance: 1.2328 strong / 1.2372 minor / 1.2391 moderate

Support: 1.2269(79) moderate / 1.2242 minor / 1.2216 moderate

Euro has seen a sharp rally over the last three trading days as a technical bounce saw a follow through on comments from Mario Daghi and Angela Merkel. This has lead to a bullish daily macd’s though stochastic is having trouble in pushing for overbought territory currently at risk of crossing lower. Note a good part of the move is due to position squaring by shorts for the past month. In the lower time frames we have sell signals in the making with 4H stochastic seeing a bearish divergence while macd is beginning to top off. Hourly charts already has a confluence of bears with stochastic just pushing oversold. Immediate risk if for a pullback with a close under 1.2269(79), 21D EMA, likely seeing the 50 Fib retracement levels at 1.2216.

AUDUSD

Resistance: 1.0500 moderate / 1.0517 moderate / 1.0553 minor

Support: 1.0446 minor / 1.0414 moderate / 1.0382 minor

Friday saw Aussy with its sought after higher high peaking just under the psychological resistance level with 1.0486. Among indicators we have daily stochastic overbought and macd also heading up while in th4 H picture stochastic is oscillating around 80 and the macd line continues to push up. Hourly charts for their part has macd crossing lower and stochastic heading for oversold territory. Immediate risk calls for further weakness with prices pulling from fresh highs. Given that the overall trend remains bullish we prefer a buy on dips to the 1.0414 moderate support area. Note a close under 1.0414 may suggest that Friday’s highs will be the latest in the series of higher highs and higher lows and market searching for its next higher low.

NZDUSD

Resistance: 0.8100 strong / 0.8131 moderate / 0.8174 minor

Support: 0.8055 moderate / 0.8029 minor / 0.7992 minor

Our rally over the last three days saw Kiwi ending the week just under a strong resistance level at 0.8100 the floor of the March to May range play. Daily indicators has stochastic overbought and the macd’s heading up though we have difficulty in getting a follow through rally. In the lower time frames the idea of a strong resistance seems to be working with a bearish engulfing in 4H candles while stochastic is coming off overbought areas and the macd line still pointing up. Hourly charts for their part has stochastic in oversold levels while the macd has crossed lower. Immediate risk calls for a pullback with minor support until the 0.7971 region. A close above 0.8100 will suggest a retrun to the 0.8100 to 0.8266 daily congestion.

GBPUSD

Resistance: 1.5730(36) moderate / 1.5776 moderate / 1.5845 moderate

Support: 1.5673 minor / 1.5611 minor / 1.5567 minor

Cable saw a close above the 200D SMA Friday seeing new highs and technically breaking the wide range play from the last two months. Indicators has daily stochastic overbought while macd is also heading up. We have started off however by easing off in the Wellington market. In intraday charts we are seeing a bearish bias with the 4H stochastic having a bearish divergence while macd is topping off. Hourly charts for their part has stochastic pushing into oversold territory while macd is heading down. Immediate risk calls for a sharper pullback which incidentally could reinforce the idea that the wide range play from the last two months is still in effect. Consider shorts from just under 1.5736 for 1.5673 possibly on to 1.5611.

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