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USDCHF Breaks Early Month Range - Focus on 9400

Monday, 06 February 2012 14:38 GMT

by  Jamie Saettele, CMT, Sr. Technical Strategist

The USD begins the week on the offensive. The USDCHF, in particular, has broken through resistance.

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Innovative Techniques with Traditional Technical Indicators

Trading with the Elliott Wave Principle

Seeing the Forest from the Trees: An Analysis of Global Markets

Afternoon Technicals (all charts)

Other TA (crosses, COT, etc.)

January Key Reversals-none

December RSI Signals-CADCHF (bearish)

Key Reversals Last Week-none

RSI Signals Last Week-CADJPY (bearish) GBPCHF USDCHF (bullish)

Daily Key Reversals (RV) and RSI Signals (RS)

Morning Comments:

US Indices – Are off of their best levels but little has changed following Friday’s NFP rally, when S&P futures traded at their highest level since the July high and Dow futures their highest level since December 2007! The divergence between the 2 futures contracts (Dow above 2011 high and S&P below) is however consistent with reversal conditions.

USDOLLAR (Ticker: USDOLLAR): Hast tested and held the 61.8% retracement of the rally from the October low and series of November lows from 9665 to 9690. Remember, the probability of a reversal increases with the beginning of a new month. Pattern is constructive above last week’s low (9687). Recent pivots are now resistance at 9790 and 9835.

USDCHF_Breaks_Early_Month_Range_-_Focus_on_9400_body_usdollar.png, USDCHF Breaks Early Month Range - Focus on 9400

Prepared by Jamie Saettele, CMT

EURUSD – Is nearing the 2/1 low at 13025. A drop below would trigger a short term bearish bias towards 12875. Resistance for today is 13080-13100.

GBPUSD – The February range thus far consists of the first day of the month. As such, a break of the 2/1 range (15882-15706) will trigger a directional bias. Downside levels of interest are 15635 and 15580. Upside levels of interest are 15945 and 16000.

AUDUSD – Is trading right at the September and October highs. Again, the first day of the month range (10740-10568) is critical to the larger trend. The next upside level of interest is late July support at 10900 and a drop under 10568 is needed in order to trigger a bearish bias. 10640/70 is near term support.

NZDUSD – Daily RSI is above 78! This is extremely rare and the most recent instances of RSI > 78 are 4/15/11 and then 7/23/07 and 7/24/07. In 2011, the NZDUSD fell 180 pips over the next 2 days before continuing its advance. The top in July 2007 led to a drop of nearly 1500 pips in 1 month. The NZDUSD has also advanced for 7 consecutive weeks. This has only occurred 7 times since 2002. The NZDUSD declined an average of 56 pips the next week.

USDCHF – Has broken through the range top at 9250 which shifts focus to former support at 9400 (also the 61.8% retracement of the decline from the January high). 9300 and 9250 are interim resistance. Favor the upside against 9110.

--- Written by Jamie Saettele, CMT, Senior Technical Strategist for DailyFX.com

To contact Jamie e-mail jsaettele@dailyfx.com. Follow me on Twitter @JamieSaettele

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Jamie is the author of Sentiment in the Forex Market.

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