EURUSD tumbles after Draghi’s comments
EURUSD tumbled on Monday after the ECB President said that the Bank is ready to provide additional stimulus if needed and that such new measures could include purchases of sovereign bonds. The pair declined after finding resistance at 1.2575 (R1), a level marked by the high of the 4th of November, but the fall was stopped 40 pips above our support line of 1.2400 (S1). In the bigger picture, the price structure on the daily chart still suggests a downtrend, but there is still positive divergence between both of our daily momentum studies and the price action, which indicates decelerating negative momentum. Thus I would prefer to stay flat for now and wait for more actionable signs to convince me that the downtrend is back in force and likely to continue.
• Support: 1.2400 (S1), 1.2360 (S2), 1.2250 (S3)
• Resistance: 1.2575 (R1), 1.2620 (R2), 1.2750 (R3)
GBPJPY within a short-term range
GBPJPY moved higher on Monday after finding support at 181.00 (S1), the lower bound of the sideways path it’s been trading in since the beginning of the month. Although the rate remains above the black uptrend line (drawn from back at the low of the 15th of October) and above both the 50- and the 200-period moving averages, bearing in mind that the pair has been oscillating between 181.00 (S1) and 184.30 (R1) I would prefer to adopt a “wait and see” approach for now. Moreover, I can spot negative divergence between both our short-term momentum studies and the price action, which supports my choice to remain neutral for now. I would prefer to see a clear move above the key zone of 185.00 (R2) before getting confident again on the upside. On the other hand, a break below the psychological area of 180.00 (S2) is the move that could flip the short-term bias to the downside and perhaps trigger extensions towards 178.00 (S3), which happens to lie fractionally close to the 38.2% retracement level of the 15th October – 6th November rally.
• Support: 181.00 (S1), 180.00 (S2), 178.00 (S3)
• Resistance: 184.30 (R1), 185.00 (R2), 188.00 (R3)
AUDUSD within a short-term upside channel
AUDUSD slid yesterday, but the decline was stopped by the lower bound of the blue short-term upside channel. The fact that the rate remains within the channel shows that the short-term path of the pair, at least for now, is to the upside. Nonetheless, taking a close look at our momentum studies, I would trust this path only if a clear move above 0.8800 (R1) occurs. Such a break is likely to see scope for extensions towards our next resistance obstacle at 0.8900 (R2). On the daily chart, since the rate remains below both the 50- and 200- day moving averages, I still see a longer-term downtrend and I believe that the recovery from 0.8540 (S2) still has a corrective structure for the time being.
• Support: 0.8640 (S1), 0.8540 (S2), 0.8500 (S3)
• Resistance: 0.8800 (R1), 0.8900 (R2), 0.9000 (R3)