6 Mar: Weekly Forecast; FX Crosses

By | March 6, 2017


EURJPY: 120.68

The cross did not do as we expected this time last week and instead of breaking below the trend low of 118.23 it turned higher and regained 50% of the previous losses from the December high of 124.08 by settling at 121.10.  Having opened the week a little lower, currently at 120.80, the dailies have picked up some ground and it appears that buying dips may be the way to go although the momentum is not strong and it could just remain choppy while waiting for the ECB and the NFP at the end of the week. The 100 DMA is at 119.80, which will provide the initial support, but below which could then see a run lower towards minor support at 118.60 and then back towards the 118.23 trend low. On the topside, resistance will be seen at 121.00 and then the monthly cloud base is at 121.80 and should provide strong resistance if we see it. Overall it looks as though we are heading into the apex of a large triangle formation (116.00/123.40)and it could remain within the ever narrowing range over the coming week or two, but right now, buying dips with a SL placed below the 100 DMA seems to be a plan. Otherwise stand aside and try an play the range with a SL placed either side.

EURGBP: 0.8632

EurGbp continued the run higher that we had seen at the end of the previous week, and has now taken out the resistance  seen at the 100 DMA (0.8600) before halting, so far, at the descending trend resistance line from the 7 Oct  ‘16 high, currently at 0.8635. This should remain strong, and the daily indicators only have mild positive momentum behind them so it may well hold. If wrong, an upside break will take the cross on towards 0.8680 (61.8% of 0.8850/0.8402) and then possibly on towards 0.8740 (76.4%). A failure here would see a return back below 0.8600 and into the previous range, with further supports at 0.8540, 0.8460 and the recent trend low of 0.8402. Selling here may be a plan, but with a tight SL placed above 0.8680, but you are going against the current trend. Alternatively buying a break of 0.8640, looking for a run to the 0.8680 resistance might also work.

GBPAUD: 1.6218

GbpAud is once again trading sideways, albeit in choppy price action which last week saw it fall sharply to a low of 1.5993, briefly taking out the January low, before an equally swift bounce back to 1.6230, where it currently sits, unchanged from this time last week

The cross is therefore trading within the convergence of trend support/resistance lines (1.6000/1.6260) and may well do so over the next few days although a break of either side would suggest an acceleration, one way of the other. Major support lies at last week’s low (rising trend support) and then at 1.5898 (8 Nov low) a break of which would allow a move to the 26 Oct low at 1.5788. On the topside, resistance will be seen at the 1.6260 trendline and then at the24 Feb high at 1.6360. The momentum indicators are neutral and offer little hint either way, so a cautious, neutral stance is required.

AUDJPY: 86.19

AudJpy continues to chop pretty much sideways, and as we said last week it appears to have put in a medium term top when it reached 88.17 (15 Feb), ahead of last week’s range of 85.85/87.48. With the daily/weekly momentum indicators seemingly aligned to point lower, we could yet be in for a move towards the 7 Feb low of 85.23, below which could see a move to 84.50.Until 83.70 is broken though, the longer term uptrend will remain intact, and if we do turn higher again, the initial resistance would lie at 86.70, and at 87.50. 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 87.50 seems to be the plan, but looking for a slide towards 85.00/20 and possibly to the 84.50 target.

EURAUD: 1.4000

As we thought last week, EurAud reversed its 2017 downtrend  and after reaching the low of 1.3626 it has since seen a strong bounce back to 1.4011, just shy of 1.4043 (38.2% of 1.4725/1.3626). If we are able to carry on, as the dailies suggest is likely, then expect a test of 1.4090/00 and then 1.4175 (50%). The weeklies are also turning to point higher, so buying dips would appear to be the plan, with dips likely to find support at minor Fibo levels from the 1.3626 low, seen at 1.3920, 1.3865, 1.3820 and 1.3770.Further out, in the event of a break below the 1.3626 low, we could then see a run towards 1.3465 (61.8% of 1.1611/1.6495) although this now seems unlikely.

AUDNZD: 1.0799

Having turned sharply higher from the late January lows, seen at 1.0325, AudNzd has continued to recover, having now taken out the sellers at 1.0800. The dailies still look mildly constructive, so further strength could take the cross on towards the 200 WMA at 1.0870 and then to the major descending trend resistance (commencing in March 2011), currently at 1.0930. The weekly momentum indicators also look supportive and buying dips seems to be the plan. If that is the case, support will arrive at  the 100 WMA at 1.0725, below which would find further  support at minor Fibo levels from the 1.0325 low, seen at 1.0625, 1.0565, 1.0510 and 1.0440. It may be that we play the range between the 100 WMA /200 WMA this week, so concentrating on that, with a tight SL on either side may be a plan.