FX Thoughts for the Day

Daily Forex Technicals | Written by Kshitij Consultancy Services | Nov 12 08 13:23 GMT |

USD-CHF @ 1.1832/35...May see 1.20-21 before 1.16 R: 1.1900-10 / 1.1960 S: 1.1839 / 1.1810-00 / 1.1755 Dollar-Swiss is sustaining gains above 1.18 so far today and could well move up to test 1.20, possibly even 1.21 over the next few days. However, take a look at the long-term trendline Resistance on the Weekly Close chart on the following page: http://www.kshitij.com/graphgallery/chfma.shtml Given that Dollar-Swiss has staged a long and meaningful upmove from the low of 0.9648 (Mar-08), there is little reason to believe that it will be able to rise past 1.21 easily in the first attempt. Rather, a fall from 1.21, back towards 1.16 might be possible in the weeks ahead. But, we could be running ahead of ourselves here. In the more immediate scenario, the chances of a rise towards 1.20-21 appear reasonably good while the market trades above 1.18 and 1.17. GBP-USD @ 1.5301/06...Nearing long-term Support R: 1.5485 / 1.5565 S: 1.5200 / 1.5122 The Cable fell to a low near 1.52 during the day and has bounced a bit from there. We see a very long-term trend-Support on the Monthly charts, which comes in near 1.52 on the Monthly Close chart and near 1.5122 on the Monthly Candles. Please take a look at http://www.kshitij.com/graphgallery/gbpmth.shtml Despite the bearishness in the market, we doubt that this Support will break easily, given that the Pound has already seen 12 full months of decline, coming down from levels near 2.1162, last seen in the week ended 09-Nov-07. Today is 12-Nov-08. Although there is no clear "Buy Signal" as yet, and a dip towards 1.52-51 cannot be ruled out, we think that those who are holding Short positions since last year might be inclined to take some profits, limiting the downside potential. Eventually, a rise past 1.55-57 could turn out to be potentially bullish. One way to play this might be to buy a 6 month GBP Call with a Strike at 1.51. Cost is high though, at 910 pips (Vol 20%). Breakeven comes to 1.60. However, should the market move up towards 1.57 over the coming weeks, the Call Price could move up towards 101 pips, giving us a decent 10% gain. AUD-USD @ 0.6607/09...Support at 0.65 holding R: 0.6666 / 0.6705-15 S: 0.6520-00 / 0.6300 The Aussie remains quiet and ranged between 0.6500-6650. While the Support at 0.65 continues to hold, a rally towards 0.67 is possible. If the Support breaks, a dip towards 0.63 could unfold. Kshitij Consultancy Service http://www.fxthoughts.com Legal disclaimer and risk disclosure These views/ forecasts/ suggestions, though proferred with the best of intentions, are based on our reading of the market at the time of writing. They are subject to change without notice.Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. Those acting in the market on the basis of these are themselves responsibly for any profits or losses that might occur, without recourse to us. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.