Today is a Japan holiday so it may be quiet, but the momentum still points lower, and as with last week, I suspect that we are about to take a look at last weeks low of 118.04, beyond which could head towards strong bids at 117.80. Below this would see further strong support at the 11 Dec low at 117.43 and then at the next degree of Fibo support at 116.80 (23.6% of 100.75/121.84). If seen I would again consider it to be a decent medium term buying opportunity. Any move lower may need to happen rather quickly as the daily cloud support, currently at around 116.00, is rising steeply and will be at around 118.00 by the end of the week. If we haven't headed lower by, say Wednesday it might be worth considering going long below 118.00 – should we see it.
The topside should find sellers now, 118.67, 119.00, 119.35, and then at the post-NFP high at 119.77 and at last Thursdays high of 119.95.
Further out, if/when 120.00 can be overcome then look for further gains towards descending trend resistance at 120.50 and the minor triple top at around 120.75. At this stage I doubt we are heading towards 121.00, but if/when we do, further advances towards the trend high at 121.85, a break of which would see a run towards the 15 July 2007 high at 122.42. In the longer term, the target of 124.13 (17 June 2007 high) would appear on the horizon but will take time given the resistance levels sitting in between.
For now, selling rallies towards 119.00, with a SL placed above the 100 HMA (119.25 or preferably above the 200 HMA (119.60), in looking for a run towards 117.80 seems to be the plan.
Economic data highlights will include:
Monday: Holiday
Tuesday: Current Account, Trade Balance, Eco Watchers Survey Current/Outlook
Wednessday: Consumer Confidence, Machine Tool Orders
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