Daily FX :: Dollar Bull Lost Its Horns

Dollar Bull Lost Its Horns

Written by Sam Shenker Technical Currency Analyst
Tuesday, 07 June 2005 GMT
Technical Overview

• Antipodeans post the biggest gains against US dollar
• Canadian dollar crosses reverse their loses
• Yen crosses give back some of their gains

Previous session overview:
Dollar continued to lose ground to the majors with Antipodeans posting the
largest gains among the majors.

EUR/USD – Euro bulls managed to push their way deeper into the dollar held
territory with the latest move about to break above the 1.2300 figure. As
the euro longs continue to recapture some of the previously lost territory
the move toward the 1.2500 figure will be a critical development for the
single currency, but a break above 1.2500 will most likely will be capped
by the 1.2700-30 range a strong resistance which marked the previous 2005
low. Also traders should expect quiet a few exotic option strike barriers
to be placed around the 1.2500 figure, making it a perfect target for the
institutional traders to aim for. Indicators signal a maturing trend with
ADX (DMI) on the daily chart is at 46.3. Stochastic remains oversold on
the daily chart at 14.86, which is indicative of a strong trend. The
Stochastic on the dealer (4HR) chart is neutral at 34.42. RSI is treading
above oversold on the daily chart at 30.19 with the 4-hour chart RSI
neutral at 45.28. MACD remains deep below the zero line on the daily chart
and is sloping upward toward the zero line on the dealer 4(HR) chart. In
case the reversal fails greenback longs will most likely resume their
advance and push the pair toward the psychologically important 1.2000
figure.

Key Levels

Level
Resistance
Details

1.2393
Major
23.6 Fib of the 1.3129-1.2165 dollar rally

1.2342
Intermediate
June 3 daily spike high

1.2293
Minor
June 6 daily high

Level
Support
Details

1.2163
Minor
June 1 daily spike low

1.2124
Intermediate
Sep 20 daily spike low

1.2027
Major
Sep 8 daily spike low

GBP/USD – British pound traders remained supportive of the cable as the
pair made its way toward the 1.8300 figure and is currently setting its
sights on the 1.8500 figure. A move toward the 1.8500 figure will most
likely see cable longs encounter stops placed by the dollar longs above
the 1.8400 figure with exotic option barriers most likely placed around
the 1.8450-1.8500 figure. A break above the 1.8500 figure will be
difficult to muster, due to the major resistance marked by the previous
2005 low. Indicators signal maturing trend with ADX (DMI) at 54.74. The
Stochastic on the daily chart is now treading above oversold at 25.75,
giving the sterling longs plenty of room to maneuver. The dealer (4HR)
chart stochastic is neutral at 61.8. RSI is treading above oversold at
37.57 on the daily chart and is neutral at 58.61 on the 4-hour chart. MACD
is making a bullish crossover below the zero line on the daily chart and
is sloping upward toward the zero line on the dealer (4HR) chart. In case
the cable longs fail to make a further advance, dollar traders should
expect the cable to tumble below the 1.8000 figure.

Key levels

Level
Resistance
Details

1.8345
Major
May 19 daily high

1.8290
Intermediate
23.6 Fib of the Apr-May dollar rally
1.8212
Minor
20-day SMA

Level
Support
Details

1.8076
Minor
5-day SMA

1.8035
Intermediate
June 5 daily low

1.79.25
Major
2005 Low