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Yesterday’s successful vote on Greek austerity looks to have set the stage for a summer risk rally. The vote of 155 to 138 passage of the first part of the austerity plan was broadly positive for risk sentiment and risk correlated trades rallied across the board. EURUSD trading was volatile but despite some pre-vote excitement, the bullish sentiment has remained. EURUSD rallied to a June high of 1.4521 and EURCHF rose to 1.2095, indicating that the fears of EURO demise have subsided. AUD & NZD continue to trade on the growing optimism, with the AUDUSD climbing above 1.0720 and NZDUSD clearing 0.8300 to 0.8319, hitting new all time highs. AUDJPY moved above its bearish downtrend ceiling, indicating a broader interest in carry trades–we would be looking to dips, to build long positions. In addition, the heavy USD selling (not helped by President Obama’s calls for more stimulus), forced Asian central banks to step in for the first time in a while. Commodities got a lift as well, with wti crude climbing to $95 and copper jumping $426. Full article…

The rally in the USD/CHF has pushed the short-term intraday time frames into an uptrend to begin the week. The question is how much longer can be bullish momentum last?

The downtrend on the 240-minute chart is strong and confirmed by a ten-bar Autochartist Initial Trend reading. The Channel Down formation would then be more likely to set up either an Retracement/Correction or Continuation of the Trend entry. Both would capitalize on the downtrend moving lower from current levels. The R/C would trigger a short-sell at current levels relying on resistance around the 1.0400 to 1.0405 area (E). The low three-bar Breakout reading suggests that there was low bullish momentum behind the move higher and subsequent pattern reversal. In order to better set up the reversal of a pattern and strong trend, a much higher Breakout reading would have offered more confirmation.

If however prices to trigger a reversal, look for buying support above the downtrend line resistance at 1.0410. The reason for this is the confirmed strength of the downtrend and the likelihood for selling into the rally and the whole, round 1.0400 level.

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