FOREX MARKETS




AUD
Bullish above 1.0780; bearish below 1.052.

It might have seemed like a volatile week for the local currency, but the net effect was a maintaining of the range that has been in place since May and June. The dip to 1.052 now becomes the critical point for a spill to the bearish side. A close below this level and next support is at the lows of late June at 1.039. A break below this level and next support is at the highs of December 2010 at 1.026.


If the close above the key level of 1.078 happens this week the outlook turns bullish. Next resistance is at the highs of May 11 at 1.089 followed by the highs of May 2 at 1.101.

Sup: 1.0520 1.039 1.0260
Res: 1.078 1.089 1.101

EUR
Bullish above 1.4220; bearish below 1.397.

On July 12 the euro closed at 1.397 on the same say that it tested lows of 1.384. The level of 1.397 was a line of support dating back to May 23 this year. That probe and rejection of the downside was a bullish signal and was followed by a strongly bullish day on Wednesday. A sideways move on Thursday and Friday was not a convincingly bullish end to the week, although little ground was lost. A move above Wednesday’s highs of 1.4220 for a second time gives next resistance at the highs of July 7 at 1.437 followed by the highs of July 4 at 1.458.

A retest and closing break of the 1.397 lows would suggest a downward test of last week’s lows at 1.384. Next support is then at the Fibonacci 62% retracement of the gains since the beginning of the year (1.286-1.494) at 1.365.

Sup: 1.397 1.384 1.365
Res: 1.440 1.470 1.481

GBP
Bullish unless below 1.591.

Sterling has been forming a pattern of lower highs and lower lows since topping in late April. A low on Tuesday last week at 1.578 was a Hammer candlestick (a bullish reversal signal), confirmed by a strongly bullish day on Wednesday. That price action was a move above the previous lower high of 1.614 and the confirmation of a double bottom pattern. The outlook is now bullish unless there is a move below 1.591. Next resistance is at the highs of June 22 at 1.626 followed by the highs of June 14 at 1.644 then the highs of May 31 at 1.655.

A close below Friday’s lows of 1.607 is likely to test the lows of 1.591. A close below the latter level and the outlook turns to bearish with a next target at the lows of last week at 1.578.

Sup: 1.607 1.591 1.578
Res: 1.626 1.644 1.655

JPY
Bullish above 82.23; bearish below 79.54.

The yen took out two critical support points last week: the June lows of 79.67 and the lows of May at 79.54. There is now little support between now and the post-tsunami lows of March 16 at 76.43 – the confirmation point for a cyclical bear market for the US/yen exchange rate. My chart only goes back to 1992 so there are no previous levels below the last support mentioned above. Using the latest rebound distance deducted from 76.63 gives a longer-term target at 67.34.

Any rebound this week could retest the lows of June 8 at 79.67 followed by the highs of July 8 at 81.48. Next resistance is then at the highs of May at 82.23.

Res: 79.67 81.48 82.23
Sup: 76.43 67.34