Other Idea's

At a glance: Political exchanges

The currently only steady factor is the permanent change on a day to day basis as markets are once more in the grip of political events, whether it is the aftermath of the German elections or the upcoming showdown in the US parliament concerning the budget. The latter seems to pressure the USD which has lost ground across the board yesterday. That said we keep a close eye on key-support between 80.053 and 79.58 (int. 76.4 %/weekly trend) in the USD Index as only a break below would open the door for a deeper USD setback. The same applies for EUR/USD and Cable where it would take breaks above the 1.3600 handle or above 1.6115 (minor 76.4 %) to support an extension of the latest USD decline. As long as these USD supports are not broken decisively though, we see the start window for a broader USD up-swing as open. A weekly close above 1.3600 would on the other hand favour a potential extension to 1.3923 (monthly Ichimoku-lagging), to monthly trend line resistance at 1.4041 and possibly to the 76.4 % retracement on higher scale at 1.4259. To get the USD out of the danger zone it would take breaks below pivotal support at 1.3452 in EUR/USD or below internal 38.2 % retracements on different scale at 1.5883 and at 1.5758 in Cable. Above the latter, an extension to the upper triangle resistance at 1.6325/37 (weekly.-monthly) can’t be excluded yet. No news on the JPY front where USD/JPY and JPY crosses traded in fairly tight ranges yesterday. The start window for a broader JPY recovery is therefore still open but in order to receive first evidence that the latter is indeed materialising it takes breaks below pivotal support at 132.16 in EUR/JPY, below 156.43/37 (pivot/minor 38.2 %) in GBP/JPYand below 97.64/61 (minor 61.8 %/daily trend) in USD/JPY. Above these key-supports, an extension to higher targets at 138.35/139.14 (Fib.-projection/2009 high) in EUR/JPY and at 162.30/163.11 (Fib.-projection/2009 high) in GBP/JPY can’t be excluded yet.

·         Short 2 units EUR/MXN from 17.4495 avg., targets 16.50/15.40, stop at 18.40

·         Long 1 unit CAD/JPY from 82.22, target 103.50, stop at 91.15 (2013 outlook trade)

EUR/USD daily – A range breakout between 1.3600 & 1.3452 is needed for directions

·         Having defended key-pivotal support at 1.3452 yesterday we still haven’t received any clarity whether this market is going to extend to the upside or whether it is just taking a break before breaking lower.

·         That said, it probably takes a break above the 1.3600 handle to put the odds in favor of a straight extension to 1.3923 (monthly Ichimoku-lagging), to 1.4041 or to 1.4259 (monthly trend/76.4 %) whereas a break below 1.3452 (pivot) would at least challenge key-support between 1.3218/10 (minor 76.4 %/daily trend) and 1.3170 (200 DMA).

GBP/USD daily – No confirmed top in place yet

·         The big picture remains blurry for the moment as a major game change would only be confirmed above 1.6337 (monthly triangle) and a top in place would only be indicated via a break below 1.5883 (minor 38.2 %).

·         That said and particularly as long as the latter is not taken out, we still see the possibility of extending the upside for a proper test of 1.6337 which would be indicated via a decisive hourly close above 1.6115 (i.e. above 1.6150). A break below 1.5883 would on the other hand have to be confirmed via a break below 1.5758 (int. 38.2 %).

EUR/GBP daily– A range breakout between 0.8354/52 & 0.8504 is needed for directions

·         Having exactly reached the projected target for a potential C-wave down at 0.8354 (C= A) the decision is due whether we have just seen an intermediate setback in an intact, long-term up-trend or whether we are dealing with a broader downtrend.

·         The latest bounce from 0.8355/54 (daily trend channel/C = A) did in every which case not surprise but in order to start favoring the bullish green scenario it would now take breaks above 0.8467 and 0.8504 (minor 38.2 %/pivot).

·         A failure to clear the latter and/or a break below 0.8355/54 would play in the hands of the bears (blue scenario) who would most likely not hesitate to push for an extension towards 0.8285 (50 %) and to 0.8219 (internal wave 3 projection). These would however only be interim targets on the way to a test of the lower T-junction at 0.8005 (int. 76.4 %).

EUR/MXN daily –The latest rebound looks to be a counter  trend rally only

·         The big picture in the monthly chart from the 2009 top down shows a huge triangle formation of which we believe the D-wave high has been marked at 17.8874 last month.

·         That said we expect the upside to be capped at 17.6903 (minor 76.4 %) and the E-wave down to its classical target at 16.4646 to unfold shortly.

·         For the latter to receive first support it would now take a break below 17.4774/4723 (pivot/minor 38.2 %) whereas only breaks below 17.3178 (minor 76.4 %) and below 17.2223 (pivot) would provide the final confirmation.

·         A decisive break above 17.6903 would on the other hand challenge monthly.-weekly trend line resistance at 18.0598/18.0714 if not the 76.4 % retracement on higher scale at 18.2175.