EURAUD: The cross has been rather volatile recently but confined within a range of 1.4235 (100 Week MA)/1.4700, and this could well hold it in the first half of the week. With the commodity bloc looking generally soft and with the DXY possibly running out of steam on the topside, buying EurAud may not be such a bad trade. I would leave it alone until we see a break of 1.4700 on the topside, so possibly buying it with a stop-entry order at 1.4725, looking for a run towards the next realistic resistance at 1.4810 (50% of 1.5831/1.3800) may not be a bad idea. Beyond there would head on to 1.4873 (21 May high) and then towards the major descending trend resistance at 1.4950. This may be tricky to overcome at the first attempt, but a break would take the cross onto 1.5021 (29 Apr high), beyond which could potentially take the cross a fair bit higher towards 1.5200, albeit that this is some way off yet.Stops on any long positions should be left suitably below 1.4700, where lower support levels would be seen at 1.4590 (100HMA/200 DMA), a break of which would head back into the choppy consolidation area and would negate any real directional trade for the time being. Daily and weekly momentum indicators are beginning to look positive though, so keep an eye on this cross.
EURJPY: The cross is consolidating in a wide band below the 20 Nov high of 149.13 and above the 27 Dec 2013 high of 145.68 (where the 23.6% of 134.15/134.13 Fibo level also provides support), and being stuck in the middle of that range, as of Friday’s close, this looks as though it may continue for a few days more, possibly until a breakout following the ECB on Thursday or perhaps the NFP on Friday. The dailies are overbought though and could do with correcting lower, so selling rallies would seem to be the play early in the week, with a SL left above the psychologically important 150.00 area, but looking for a return to the bottom end of the range, and beyond towards 144.70 (minor) and then towards 143.35 (38.2% of 134.15/134.13) . In the longer term though, the weeklies are heading higher and eventually, possibly sometime in 2015, once 150 is taken out, then we can expect an advance towards 151.76 (76.4% of 169.95/94.10) and beyond. For the time being though playing the wide range appears to be the best plan.
The cross continues to hold up rather well given the contrasting outlook of the two economies, although I suspect this is largely due to the market being overweight on the short side, looking for a run back down towards the recent lows of 0.7800 and then 0.7766. While I suspect that we are eventually headed in that direction, we may need a bit more of a clean-out before hand and we could yet see another test of the topside, where the recent high/200 DMA at 0.8040 would be the major target. A break of this could see a run higher towards 0.8080 (50% of 0.8399/0.7766) beyond which would head to 0.8155 (61.8%). Any rally towards 0.8100 should, I think, be used as as sell opportunity as I suspect the cross will eventually roll back to the initial support, currently at 0.7915 (100 DMA), beyond which would find buyers at last week’s 0.7895 low. A break of this would probably negate the chance of a run above 0.8040 for now and could mean more choppy trade above 0.7800.
WTI collapsed again on Friday, making it 11% over the two days of the US Thanksgiving holiday and closed almost on its lows, right on major Fibo support (61.8% of 35.50/114.79). The next target is the Sept 2009 low at 65.03, a break of which would potentially see a steep decline towards $60.00 (200 Month MA) and then to the next major support at the July 2009 low at 58.30, which some analysts are already saying will happen. We shall see. On the topside, minor resistance is at 67.00, ahead of last Thursday’s low at 67.66. The first Fibo resistance is to be seen at 68.47 (23.6% of 77.76/65.72) but this looks rather distant. I suspect we are in for continued volatility and some of the bounces could be rather sharp so extreme care is required, especially if the current Fibo support continues to hold. A day traders dream, but possibly not one for the position takers in the next couple of days! Despite possible bounces, I still prefer to play if from the short side though an suspect that sub $60 eventually lies ahead. If correct the commodity bloc currencies will be (a lot) lower, so worth watching.
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