27 Feb: Weekly Forecast; FX Crosses

By | February 27, 2017


EURJPY: 118.55

EurJpy continued its recent downtrend at the end of last week, falling to a low of 118.23 – last seen in November – pretty much where it finished. The 4 hour/daily momentum indicators appear to suggest that further losses lie ahead and having now broken cleanly below the 100 DMA (119.40), we could now see a deeper decline towards  the 200 DMA, currently at 117.65 and then to the 50% reversal of the move up from 109.44 to 124.09, at 116.75. Below that, although still some way off, lies the rising trend support from the 24 June ’16 low (109.44), currently at 116.00.

On the topside, the initial resistance will be seen at the 5 December spike low at 118.70 above which we could see a return to the 100 DMA. Beyond that, minor Descending trend resistance lies at around 120.00 although this looks unlikely to be revisited in the near term.

As with last week, selling rallies is preferred, looking for entry levels at around 119.25, with a SL at 120.15 and a TP at 117.75

EURGBP: 0.8470

EurGbp is still chopping around in a wide .8400/0.8600 range (last week 0.8402/0.8554) and it could be a similar outlook for the days ahead although Sterling was heavy on Friday and looks likely to be under pressure again early in the coming week.. Nearby resistance lies at 0.8500, but above that could see a return to last week’s highs and possibly on to the 100 DMA at 0.8615. On the downside, support minor will be seen at 0.8435 and again at 0.8402. A break of 0.8400 would then allow for a deeper run lower, towards 0.8335, which should be strong support, if seen. As we said before, it could be that the cross is forging a large head/shoulder formation with a neckline at 0.8335 and an objective at 0.7325 although it is difficult right now to see why Sterling should appreciate so sharply given the ongoing Brexit concerns.

In the meantime the 4 hour/daily momentum indicators are neutral, so further choppy trade looks likely although I suspect the topside is going to come under pressure and that 0.8500 will not remain intact for very long.

GBPAUD: 1.6230

GbpAud is trading sideways, albeit in choppy price action. It is currently just 50 points above last Monday’s levels but it is reaching the convergence of trend support/resistance lines suggesting a possibly break out and an acceleration, one way of the other, in the days ahead. Initial support lies at 1.6160 (rising trend support) and at, 1.6127 (16 Feb low) a break of which would allow a move to the 16 Jan low at 1.6013. On the topside, resistance will be seen at 1.6300 and then at last week’s high at 1.6360,which pretty much ties in with the descending trend resistance, and if seen should see plenty of sellers.

For the time being, further 1.6120/1.6350 price action looks likely although the downside appears the most likely to come under pressure because of the ongoing Brexit concerns..

AUDJPY: 86.10

AudJpy appears to have put in a medium term top, when it reached 88.17 (15 Feb), and having fallen heavily last Friday it is now trading just above 86.00. With the momentum indicators seemingly aligned to point lower, we could yet be in for a move to the 7 Feb low of 85.23, below which could see a move to 84.50.Until 83.70 is broken though, the uptrend will remain intact, and if we do turn higher again,  initial resistance would lie at 86.70, 87.00 and at 87.40. If wrong about this scenario, then above the 88.17 trend high would allow a run up towards 89.50 and above which would test the December 2015 high at 90.72.

For now, trading from the short side, selling into strength, with a SL placed at 87.40 seems to be the plan, but looking for a slide towards 85.00/20 and possibly to the 84.50 target.

EURAUD: 1.3765

EurAud has been in a steady downtrend from the December 30th, 1.4725 high through 2017, reaching new lows last week at 1.3626. We have seen a 40 point bounce from here and  the dailies do appear to be turning a little higher so any further strength would see sellers at 1.3835 (minor) and then at 1.3900 (17 Feb high). Above that could then signal an acceleration towards 1.4040 (38.2% of 1.4725/1.3626).  The weeklies are still pointing lower though, so any rallies towards 1.4000/50 would appear to provide an opportunity to get short for the medium term trade, with support seen at the 1.3626 low, a break of which would allow an eventual run towards 1.3465 (61.8% of 1.1611/1.6495).

AUDNZD: 1.0654

Having turned sharply higher from the late January lows, seen at around 1.0320, AudNzd rallied nicely last week to perfectly meet the trend resistance at 1.0748 and then reversing lower as the week progressed, to finish back below 1.0700 and the 100 DMA at 1.0730. Looking ahead, 1.0730/50 is going to remain formidable resistance but if broken, we could see a run towards last October’s high at 1.0765 and then to the 200 WMA at 1.0870 and the major descending trend resistance, currently at 1.0930. While the weekly momentum indicators are still looking supportive, the dailies seem to have run out of some steam and we could see some dips towards 1.0600 and below there, to the 100/200 DMAs, currently both at around 1.0525.

Buying dips towards 1.0600 seems to be the medium term plan, with a SL placed at just below 1.0520.