Technical Report – April 8, 2013: USD/JPY Breaks Major Long Term Fib Resistance

Chart of the Day:  USD/JPY

 The USD/JPY has clearly broken from its previous symmetrical triangle on the short term charts, and the upside break here was followed by a Monday gap above the 61.8% Fib retracement of the decline from 110.60.  This area came in at 97.15 and this is vital for determining the long term prospects for the pair.  Long term strategies should clearly look for buy entries but with indicator readings now severely overstretched, the prudent move is to wait for a downside correction before getting into new long positions. First support is now seen at 96.70.

  The EUR/USD is moving higher but still holding below the important psychological level at 1.30.  An upside break here does look imminent but some stalling here is not surprising, given that this is also where the 200 period EMA comes in on the 4H charts.  First support to the downside is seen at 1.2965, and if this area breaks expect more sideways trading before the medium term uptrend resumes.  In this case, breakout positions are acceptable, so traders can get long if 1.3010 trades.

  The AUD/USD is rolling over after hitting the resistance line of its symmetrical triangle, and this does not bode well for the short term prospects of the pair.  In addition to this, prices have broken historical support at 1.0380 (which is just above the 100/200 period EMA cluster on the dailies).  Overall, this favors sell positions at these relatively elevated levels so traders should be looking at new rallies as an opportunity to sell.  Resistance overhead now comes in at 1.0495.

 The USD/CHF is starting to look top heavy now that the triple bottom at 0.9380 has broken to the downside. The upper end of the range structure resembles a head and shoulders pattern, so the overall bias is to the downside with the next target seen at 0.9280. In order to reverse this bias, we will need to see a clean break of 0.9430, and if this occurs expect range trading for the near term.  Indicator readings are showing negative momentum, however, so upside breaks are looking less likely.





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