This text is from blog famous currency strategist Joel Kruger .
GREENBACK JUST PAUSING FOR BREATHER – While the broader outlook continues to favor across the board US Dollar strength, the market is currently locked in a bout of shorter-term consolidation. In truth, I would not rule out the possibility for additional USD weakness (and risk positive trade) over the coming sessions, but at the same time, would also welcome a more immediate resumption of USD buying. Technically, here are some of the key markets I am looking at, which ultimately play a major influence on all other global securities:
20/200-DAY SMA RESISTANCE – EUR/USD has recently traded back over 1.2800, and while the market should be very well offered in the 1.2800′s (20/200-Day SMAs), we could still see an overshoot towards 1.2900 before the major pair stalls out. Selling into 1.2880 or back below 1.2660 is the preferred strategy. Ultimately, I am projecting ongoing declines back towards and eventually below the 2012 low at 1.2040. Only a weekly close back over 1.3000 would give reason for concern.
See forex daily technical analysis video made by Joel :
WAIT FOR NEXT DIP AND BUY – USD/JPY has been in the process of rounding out a major longer-term base and has been gaining bullish momentum in recent days. The establishment back over 80.00 confirms the constructive outlook and should open the door for a more immediate and direct test of the 2012 high at 84.20. Nevertheless, I would not recommend buying at current levels, and prefer to wait for a dip back into the 80.00-80.50 area for fresh opportunities.
LOOK OUT BELOW – AUD/USD has done a very good job of being well supported over the past few weeks, but here too, there are significant risks for material weakness. Despite recently trading back over 1.0400, the market looks to be carving its own longer-term top since peaking over 1.1000 back in 2011. Any rallies are expected to be very well capped ahead of 1.0600 (ideally would love to see this latest rally stall just over 1.0400), with a break back under 1.0285 to likely confirm and accelerate declines well below parity. A confluence of all relevant daily moving averages also warns of an impending breakout, which based on the above analysis, should be to the downside.
DON’T BE FOOLED – SPX (S&P 500 Index) has found some bids in recent trade, but market participants should not be fooled. The major equity index is still looking quite bearish in my opinion, with any additional rallies seen very well capped on a daily close basis below 1400 on a daily close basis. A lower top should take form over the coming sessions, ahead of the next major downside extension to test 1300. Back under 1340 would officially confirm bearish continuation.
