Forex

While the rest of the majors have contented themselves in their anti-dollar advances, the USDJPY looks as if it may be turning in the greenbacks favor. While this may have to more to do with risk trends than anything else, we do not have to concern ourselves with the particulars. What is notable for us is the proximity of notable Fibonacci levels and the pressure those technicals will have in building up a potential breakout. Resistance is clearly defined by an easily read 38.2% retracement of the 12/27 to 1/23 bear wave. Support, on the other hand, is at the 50% Fib level of the shorter lived 1/23 to 2/14 swing high. I am still flat on this pair, but I will be watching intently to see if a break can offer greater direction for the USDJPY.


USD/CHF
Strategy: Flat, waiting for a confirmed, break above the short-term 38.2% fib at 1.1060 or clearing record lows with momentum
Though USDCHF has broken the bounds of its tight range from last week, direction was quickly lost and the pair fell right back into a stifling congestion zone. The choppy price action from this pair may be the work of a market trying to gradually build a floor for price action; but it is too early to qualify such speculation. Without direction, there is limited profit potential and high risk in being whipped out; so I will wait for 1.1060 (the 50% retracement of the 12/21 to 2/4 swing low) to fall before taking a short-term upside outlook. The more sound probabilities are behind continuation of the long-term trend to the downside; but qualifying momentum in this direction may prove more difficult.

AUD/USD
Strategy: Bullish against 0.9050, Targeting 0.9405
The Australian dollar’s climb is relentless. Considering today’s market conditions and the majors’ struggle to find direction, the AUDUSD’s advance is surprising. Composing myself from this surprise, it is now time to move up my stop to secure profits on this steady advance. A 0.9050 floor should prove reliable as it falls below a notable fib, pivot point and the pair’s short-term rising trend. Our next target remains a test of the multi-decade 0.9405 high (which seems a more probable target considering the record highs seen recently in NZDUSD). Should this level fall in the coming week, I will have to turn to extensions to calculate the next target on AUDUSD.

NZD/USD
Strategy: Bullish against 0.7850, Targeting 0.8275
In an unusual twist of market fate, the New Zealand dollar’s advance this past week has been more momentous than its Australian counterpart’s. NZDUSD has surpassed its previously set 22-year high on Monday and punctuated the milestone by closing above the 7/24 intraday high. However, despite the technical significance of these new highs, there has been very limited follow through with the pair holding to the same choppy conditions that ushered it to a multi-decade high. The lack of follow through suggests hesitation; and I have therefore moved up my stop and drawn up my next bullish target: the 161.8% fib extension from the 1/15 to 1/22 downswing.