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Daily Observations: September 26, 2012

Christopher Vecchio

Current Positions:

- Long AUDUSD from net 1.0454 (1.0525, 1.0455, 1.0421, 1.0435), Stop at daily close <1.0395, Target 1 at 1.0615, Target 2 at 1.0670, Target 3 at 1.0800

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

- Long USDJPY from 77.92 (1/2), Stop at Breakeven, Target 1 at 79.10/30, Target 2 at 80.60/65


Pending Positions:

- Pending Long USDJPY daily close >80.65


- AUDUSD: The descending trendline off of the August 9 and August 23 highs has kept the pair supported the past few days has broken, and whatever base the 20-EMA at 1.0420/25 was providing was only short-term in nature. Near-term resistance comes in at 1.0375/80 (descending trendline off of the August 9 and August 23 highs, 50-EMA),1.0425 (20-EMA, mid-August swing lows), and 1.0480/85. Interim support comes in at 1.0335/40 (200-DMA), and 1.0270/80. Bias: bullish above 1.0250/70.


- EURUSD: With the pair closing below the 61.8% Fibo retracement (February 2012 high to the July 2012 low) at 1.2934 yesterday, a move towards the next level of support in the mid-1.2800s was to be expected. This coincided with an Evening Star candle cluster on the 4-hour chart at the 20-/50-SMA confluence, a bearish sign. Interim support comes in at 1.2825/40 (20-EMA, 200-DMA, late-April swing high). Near-term resistance lies at 1.2915 (5-EMA), 1.2930/35, 1.3000, 1.3145, and 1.3165/75 (September high). Bias: bullish above 1.2935.


- GBPUSD: The British Pound has held up remarkably well amid a flight to safety. However, the GBPUSD has now traded close to the key 1.6120/40 level, our guide for bullish/bearish price action. As long as the GBPUSD closes above said level this week, the door is open for a move towards 1.6400 by the end of the month. The former April swing highs at 1.6260 (by close), 1.6300 (by high) are in focus, now that the descending trendline off of the April 2011 and August 2011 highs broke last week. Below 1.6120/40 support comes in at 1.6030/35 (20-DMA), 1.5970 (ascending trendline off of August 2 and August 31 lows, former channel resistance off of June 20 and August 23 highs), and 1.5770/85 (late-August swing lows). Bias: bullish above 1.6140.


- USDJPY: No change from yesterday as the pair moves towards near-term support at 77.65/70: “The USDJPY continues to move lower off of the pullback at trendline resistance last week, spurred on by a general feeling of disappointment on the BoJ’s newest stimulus measures has created the ideal sell-off situation. Now that price is below 77.90, 77.65/70 (June 1 low), 77.45/50, and 77.10/15 (September low) are in focus. A close above 77.90 leaves open the possibility for a rebound to 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: bearish.



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


To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

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