We reshorted the additional portion on a move below the 21-day moving average (1.5540) and have lowered our stop to just above the recent highs (1.5655).
Recent quiet action is not unexpected ahead of the much-watched European Summit in Brussels this Thursday/Friday.
That said, we continue to note the similar foreign exchange action as the last FOMC meeting in April when the US Dollar consolidated, with a downward bias and negative Momentum, then rallied 500 points in the next month. Our Momentum indicator turned back positive this morning... one week after FOMC... the same as it did after the 25Apr meeting.
Support: 0.9930: Rising 21-day moving average
0.9765-0.9780: 11-12June congestion lows
0.9685: -2STD below 21-day moving average
0.9565: 01June low, traces back to support from last November.
0.9000: Target for a bearish rising wedge pattern back to the 01June low
Resistance: 1.0000: Psychological level and 50% retracement of the late April to early June decline
1.0142: 20June high
1.0175: +2STD above 21-day moving average
1.0195: 200-day moving average
1.0200: 50% retracement of the early March to early June decline
Comment: Our falling Rate of Change is within a session or two of dragging our Momentum indicator negative.
Volume has been declining during the recent consolidation since last Thursday’s break below the rising channel. It seems to be on track to better figures on today’s modest weakness. Watch our bearish rising wedge formation noted above.
This week’s Aussie economic calendar is light, so attention should focus on Europe and global growth prospects. The RBA is scheduled to announce its decision on rates next week Monday night/Tuesday morning.
Seasonal Snapshot (cash): The 5-year pattern’s upward bias extends until the end of July.
The 15&30yr patterns fall out of bed throughout the rest of the month.
British: 28June We reshorted the additional portion on a move below the 21-day moving average (1.5540) and have lowered our stop to just above the recent highs (1.5655).
Support: 1.5330: -2STD below 21-day moving average
1.5267: 01June low
1.5222 09Jan low
1.5179: Oct 2011 low
1.4600: Target for a pennant formation in place since 01June low.
Resistance: 1.5540: 21-day moving average
1.5647: 26June high
1.5720: 200-day moving average
1.5800: Psychological level and support from late March through mid-April. This is also near the 50% retracement of the late April thorough late May sell-off.
Comment: An as expected, but weak GDP still has the Sterling back on its heels. We feel the failure to make a new high in the nearby action targets the 01Juine low. Volume has been falling during the recent consolidation, but appears to be stronger today. Shorter-term charts show this to be true, as well.
Seasonal Snapshot (cash): The5&30yr patterns consolidate and the 15yr tracks lower until an upward bias imposes itself on 05July and lasts until 25July.
Support: 0.9663: 12June low
0.9595: -2STD below the 21-day moving average
0.9554: 04June low
0.9200: Target for a bearish rising wedge pattern since failing to reverse higher on 30May.
Resistance: 0.9700: Psychological level, the 21-day moving average and the late May support before the lows were put in on 6/4.
0.9815: 20June high and +2STD above 21-day moving average.
0.9850: 200-day moving average and 50% retracement of the early May to early June decline.
Comment: Morning action is probing below the flat lining 21-day moving average. Our technical indicators continue to roll over and our Momentum indicator is on the cusp of going negative.
Attention will most likely remain on the developments in Europe and global growth prospects until Friday’s GDP release.
Seasonal Snapshot (cash): All three patterns consolidate wildly until the end of June.
Dollar Index: 28June
Support: 82.42: 21-day moving average
81.55: -2STD below the 21-day moving average
81.25: 15June low
81.025: 21May low
83.28: +2STD above the 21-day moving average
83.67: 01June high
87.70: Longer-term target for a break out above a bull flag from the 30Apr low.
Comment: Volume has come in fits and starts, but seems stronger on today’s move higher.
Our technical indicators are swaying positive again. Our Momentum indicator is on the cusp of joining our positive Trend, which bottomed late last week. Our Overbought indicator is moving higher, but well off May’s extreme levels (66 vs. mid 90’s).
We remind readers that downside risks include plenty of gaps to fill all the way down to 79.615 (04May).
Seasonal Snapshot: The 5yr’s weakness until early Aug is much more pronounced than the 15&30yr’s consolidation with a downward bias.
Euro-FX: 28June A lot of chatter, most of it negative ahead of today and tomorrow’s European Summit in Brussels.
Support: 1.2370: -2STD below the 21-day moving average has offered solid support for recent action.
1.2288: 01June low
1.2000: Psychological level
1.1874: June 2010 low
Resistance: 1.2535: 21-day moving average
1.2700: +2STD above moving average has offered solid resistance for recent action
1.2750: 18June high
Comment: Poor European economic data flow and negative headlines have our falling Rate of change dragging our Momentum indicator negative. Stronger Volume validated last Thursday’s drop to 21-day moving average support. Volume has been declining ever since and the market sags below the average. We feel the mid June failure to forge a higher high above late May levels targets the ensuing 01June low. We also note the +-2STD Bollinger Bands are contracting on this recent consolidation.
All eyes are trained on the European Summit. The market is telling us that expectations are low that anything material will be decided. The European economic calendar ramps up along with the Summit on Thursday and Friday. See above for details.
Seasonal Snapshot: The 5&15yr patterns consolidate and the 30yr pushes lower until the end of June.
Support: 1.2442: -2STD below the 21-day moving average
1.2435: 16May low
1.2415: 25June low
1.2233: 20Apr low
1.1879: 15Mar low
Resistance: 1.2622 21-day moving average
1.2705: 200-day moving average.
1.2801: +2STD above 21-day moving average
Comment: Better than expected Retail Sales has boosted the Yen, but it has found some resistance at the 21-day moving average.
Our technicals are showing signs of coming off a negative bias, as this market has holding above the first support level.
Tonight’s evening economic calendar crests higher with CPI, Household spending, Unemployment and Industrial Production.
Seasonal Snapshot: All three patterns consolidate with an upward bias until 20July.
Disclaimer: The information presented in this report is taken from sources we believe to be reliable and accurate. This information is not guaranteed as to accuracy or completeness. The opinions expressed are based on our best judgment at the time of writing and are subject to change without notice. These opinions should not be construed as an inducement or advice to enter into any Futures or Options on Futures transaction except where explicitly stated. There is risk of substantial loss in trading futures and options. One's financial suitability should be considered carefully before placing any trades. Past performance is not indicative of future results.