Daily Observations: September 14, 2012

Christopher Vecchio
September 14, 2012

Current Positions:

- Short AUDUSD from 1.0611, Stop at 1.0640, Target 1 at 1.0400

- Long EURCHF from 1.2018, Stop at 1.1990, Target 1 at 1.2500, Target 2 at 1.2750

- Long USDJPY from 77.92 (added), Stop at 77.60, Target 1 at 79.60, Target 2 at 80.60/65

Pending Positions:

- Pending Long USDJPY daily close >80.65

Closed Positions:

- Short GBPUSD was opened at 1.6135 on Thursday post-FOMC and was closed at the end of the day with price closing above 1.6140 (descending trendline, see Thursday’s Daily Observations), loss of -20-pips given end of day close at 1.6155.

- AUDUSD: The AUDUSD is threatening a breakout today, with the descending trendline off of the February 2012 and August 2012 highs coming in at 1.0560 today. Near-term resistance comes in at 1.0600/15 (August high) and 1.0630. Should we see a rally up towards 1.0600 again, another failure would market a Double Top and signal a push for a test of 1.0265 (ascending trendline off of the June 1 and September 6 lows) then 1.0200/05 (100-DMA). Bias: bearish but close to flipping to bullish.

- EURUSD: The EURUSD continues to impress, breaking through its 61.8% Fibonacci retracement on the February high to July low yesterday, now testing 1.3100 (!) and the 76.4% Fibonacci retracement at 1.3145. Near-term resistance lies, there and at 1.3240, 1.3265/85, and 1.3360. It is possible that a long-term bottom is now in at the 1.2040/45 low set in late-July. Interim support comes in at 1.2995/1.3005 (mid-April swing low), 1.2930/35, and 1.2820/30 (200-DMA, late-April swing high). Bias: bullish above 1.2950 (5-EMA).

- GBPUSD: The key 1.6120/40 level cracked with ease today and we’ve thus shifted our bias somewhat. A weekly close above said level opens the door for a move towards 1.6400 in the coming days. The former April swing highs at 1.6260 (by close), 1.6300 (by high) are in focus for now; this would also represent a break of the descending trendline off of the April 2011 and August 2011 highs. Below 1.5930/40, near-term support comes in at 1.5860/75 (ascending trendline off of August 2 and August 31 lows), 1.5770/85 (late-August swing lows), and 1.5700. Bias: bullish above 1.6140.

- USDJPY: The USDJPY has rebounded today in line with a rising US 10-year Treasury Note (widening 2s10s spread). The June 1 swing low at 77.65/70 was broken yesterday leading to a washout in new lows below 77.30, something repeatedly noted over the past week as a potential occurrence. A close below 77.90 leaves open the possibility for 77.65/70 and 77.30. A close back above 77.90 exposes 78.10/20, 78.60, and 79.10/30 (100-DMA, 200-DMA, descending trendline off of the April 20 and June 25 highs). Bias: bullish above 78.10/20.

Any other trade ideas and general macroeconomic musings can be found in the Real Time Newsfeed, or by following me on twitter @CVecchioFX.

--- Written by Christopher Vecchio, Currency Analyst

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