Euro Showing Potential for Double Bottom within Double Bottom

Euro Shows Potential for Double Bottom within Double Bottom. Dollar/Yen Inching Closer to Test of Major Neckline. British Pound Closes Above 50-Day SMA. Dollar/Swiss Not Ready for Breakout Just Yet. Dollar/Cad Reaches Apex; On Breakout Watch. Australian Dollar Extend Gains to Hit Profit Target. New Zealand Dollar Closes Above 10-Day SMA; Stops at Cost.

EUR/USD

The pairing has been remarkably well propped on dips over the past several days with the 1.2700 area acting as formidable support. A closer look at the daily chart reveals the potential for a double bottom within a double bottom, with the initial neckline coming in by 1.3055 (4Feb high) and the more significant neckline coming at 1.3330 (27/28Jan highs). A break above 1.3055 should easily accelerate gains back towards 1.3330, while above 1.3330 will project significant upside towards the 1.3900 area.

Strategy: BUY@ 1.3070 FOR A 1.3330 OBJECTIVE, STOP @1.2890.

USD/JPY

Price action over the past two days brings our double bottom outlook back into focus with the market now approaching key neckline resistance by 94.60. Another interesting development in the price action has been the push back into the Ichimoku cloud for the first time since September 2008. This is a bullish development and could open the door to more substantial gains over the medium-term. The pair will need to break above the cloud however to officially initiate a longer-term bullish signal. The cloud top now loosely coincides with the neckline of the potential double bottom. We have trailed stops on our long trade to lock profit.

Position: LONG @ 89.65 FOR A 92.95 OBJECTIVE, REVISED STOP @90.65.

GBP/USD

Another impressive day for the pairing with Sterling once again extending gains to easily exceed the 50-Day SMA. The break back above this moving average is significant as it has contained rallies for a majority of the downtrend. Nevertheless, we would recommend bulls to proceed with caution and look for a two-day close above the 50-Day SMA before initiating fresh long positions. Additionally, the market is now running into a confluence of resistance by 1.4900 in the form of fib and minor trend-line (see below).  
Strategy: SIDELINED; AWAIT CLEARER SIGNAL.

USD/CHF

Gains have failed to materially extend on Friday after breaking beyond the multi-day range highs at 1.1715. The upside push stalled out at 1.1745 before reversing course to trade back down towards Thursday's low. It looks like we could still be locked in sideways trade for a while longer before ultimately breaking higher to challenge the 1.2300 trend highs. Look for a break back below 1.1575 to confirm and open deeper setbacks to 1.1400 over the coming days.  
Strategy: SIDELINED; AWAIT CLEARER SIGNAL.

USD/CAD

The market remains confined to a choppy range trade with the price recently failing by loose falling trend-line resistance at 1.2765 (21Jan high). Look to continue to play the triangle high-lows until a meaningful break has been achieved. The overall structure is bullish and as such establishing a long position on a dip to triangle support should prove to be rewarding.

Strategy: BUY@ 1.1925 FOR A 1.3020 OBJECTIVE, STOP @1.1740.

AUD/USD

Our long trade from 0.6390 has met its objective at 0.6735 today and we will stand aside for now with the market already retracing just over 50% of the 0.7270-0.6250 move. However, the risks from here are for additional upside over the coming days back towards the 0.7000 psychological barriers. With the overriding trend still grossly bearish, we will look to sell on a topside failure by the latter.

Strategy: SIDELINED; AWAIT CLEARER SIGNAL.

NZD/USD

Daily studies have finally turned up and our long trade from 0.5100 is doing well. The market has surged on Friday to just shy of our 0.5380 objective and we expect this level to be tested into the early week. The close above the 10-Day SMA provides added confirmation for short-term structural shift and plenty of room exists for a more significant push into the 0.5550-0.5600 area over the coming days. Dips should now be well supported ahead of 0.5210. Our stop has been trailed to cost to limit risk.

Position: LONG@ 0.5100 FOR A 0.5380 OBJECTIVE, REVISED STOP @0.5100.

DailyFX