TRADING IDEA FOR TODAY, FRIDAY, 24-05-2013

EURUSD

Sell at 1.2975
Target: 1.2860
Stop: 1.3010

As the single currency has rebounded again after finding support around 1.2904, suggesting near term upside risk remains for the strong rebound from 1.2821 to extend marginal gain, however, as broad outlook is still consolidative, reckon upside would be limited to 1.2972-75 (50% projection of 1.2821-1.2957 measuring from 1.2904) and bring retreat later. A break of 1.2904 support would bring test of the Kijun-Sen (now at 1.2889) but break of the lower Kumo (now at 1.2877) is needed to signal top is formed, bring weakness to 1.2850-55, then towards said support at 1.2821. Looking ahead, only break of this support would retain bearishness and bring resumption of decline for a retest of 1.2796 recent low.

In view of this, we are still looking to sell euro on further recovery. Only break of 1.2998-1.3000 would shift risk back to the upside for a stronger correction of recent decline to previous resistance at 1.3030 and possibly towards 1.3050.

USDCHF


Sell at 0.9760
Target: 0.9650
Stop: 0.9795

Dollar's recovery after yesterday's selloff to 0.9634 suggests minor consolidation would be seen and above 0.9715-20 would bring another bounce to 0.9737 (50% Fibonacci retracement of 0.9839-0.9634, however, as top has been formed at 0.9839, upside should be limited to 0.9761 (previous resistance and 61.8% Fibonacci retracement) and bring another decline, a break of said support would extend the fall from 0.9839 for correction of recent upmove to 0.9620-25 and later towards 0.9600 but reckon previous support at 0.9578 would hold from here, bring another rally later.

In view of this, we are looking to sell dollar on recovery as 0.9750-60 should limit upside. Above 0.9800-05 would risk another test of this week's high of 0.9839 but break there is needed to confirm recent upmove has resumed and extend gain to 0.9875-80, however, reckon 0.9900 would hold from here.