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Dollar Makes Its Move, But Multiple Support Zones May Maintain Euro’s Momentum

By Sam Chenker
15 March 2005 01:35 GMT

A further move by the euro bears may retest a major support at 1.3270, established by the triple top formation that the single currency formed during February 22- March 7 consolidation range.  The current dip below the 10 day SMA should retest an a major support at 1.3305 established by the 23.6 Fib of the 1.2730-13482 euro rally and by the 61.8 Fib of the 1.3669-1.2730 dollar rally. A combination of these two key Fib levels should provide euro bulls with additional support. A breakdown of a support of such magnitude may see the pair retest the bids at 1.3270, followed by the support at 1.3184, a key 38.2 Fib of the 1.2730-13482 euro rally. The oscillators remain mixed with the Stochastic oversold at 19.11 curving upward. RSI is neutral at 45.54, treading sideways. MACD remains in the positive territory above the zero line, but the downward momentum tilts support to the dollar bulls.

Key levels: Longs should continue finding a major support at 1.3305, established by the 23.6 Fib of the 1.2730-13482 euro rally and by the 61.8 Fib of the 1.3669-1.2730 dollar rally, followed by another major support at 1.3270, established by the triple top formation formed during February 22- March 7 consolidation range. An intermediate support can be found at 1.3284 level, created by the 20 day SMA. A minor support can be found at 1.3440, a daily low. Major resistance is seen at 1.3484, a top of the euro's rally. Minor resistance is seen at 1.3399 created by the 10 day SMA.

USD/JPY - The USD/JPY continues to travel within a downward slopping channel, creating a short-term swing setup.  Dollar longs failed to penetrate the resistance at 105.20, created by the channel's upper boundary and fell back to a minor support at 104.61, created by the 10 day SMA. A channel breakout may see the pair retest the major resistance at 105.50-65 zone, created by the 23.6 Fib of the 101.68-106.87 yen rally and February 24 and March 4 swing highs.  As the pair continues to swing within the channel, dollar bulls should find an intermediate support at 104.27 created by combination of the 20 day SMA and a 50.0 Fib of the 101.68-106.87 dollar swing rally. Breakdown of an intermediate support can see the pair retest the major support at 103.66, a 61.8 Fib of the Jan-Feb dollar rally and the channels lower boundary. Oscillators are mixed with the Stochastic dipping below the overbought level at 71.11 with a downward bias. RSI is neutral at 57.46 with MACD crossing above the zero line, supporting the dollar bulls.

Key levels: Major support levels are seen at 103.66, a 61.8 Fib of the Jan-Feb dollar rally and the channels lower boundary. Intermediate support is seen 104.27 created by combination of the 20 day SMA and a 50.0 Fib of the 101.68-106.87 dollar swing rally. Minor support can be seen at 104.61, created by the 10 day SMA.  Major resistance levels are seen at 105.20, created by the channel's upper boundary and 105.50-65 zone, created by the 23.6 Fib of the 101.68-106.87 yen rally and February 24 and March 4 swing highs.

GBP/USD - Cable bulls retreated as the pair met major resistance at 1.9328, created by the December 31 pullback of the Dec-Jan dollar rally. Current pound rally seems to be on pause as the pair broke through the support created by the 10 and 20 day SMA, which now should act as a minor resistance at 1.9190 and 1.9227 levels. Major resistance is seen at 1.9328, rally's top. Intermediate support can be seen at 1.9133, a 23.6 Fib of the 1.8505-1.9328 pound rally, followed by 1.9113, a double bottom of the weekly range. Major support is seen at 1.9000 and 1.9050, a March 3-4 lows and a 38.2 Fib of the Feb-Mar cable rally. Oscillators are bullish with Stochastic sloping upward at 27.14. RSI is neutral with an upward bias at 42.22. MACD is the only bearish indicators, crossing below the zero line.

Key levels:  The major support is seen at 1.9000 and 1.9050, a March 3-4 lows and a 38.2 Fib of the Feb-Mar cable rally. The intermediate support can be found at 1.9133, a 23.6 Fib of the 1.8505-1.9328 pound rally, followed by 1.9113, a double bottom of the weekly range. Longs should encounter minor support at 1.9148 level, a 61.8% Fib of the 1.9544-1.8502 dollar rally.  Major resistance is seen at 11.9328, rally's top. The 10 and 20 day SMA's create a minor resistance at 1.9190 and 1.9227 levels



USD/CHF - Swissie retreated against the greenback leaving a major support after failing to push below the bids at 1.1479. As the pair rebounded from the lows not seen since January, dollar longs will have to contend with a minor resistance at 1.1648, a 20 day SMA. A move above the 20 day SMA will retest the offers at 1.1663, a 23.6 Fib of the 1.2262-1.1479 Swissie rally. Any breakout above that level will be met with the resistance at 1.1781, a 38.2 Fib of the Feb-Mar dollar sell off.  Oscillators are mixed with Stochastic dipping below the overbought level at 73, with a downward bias. RSI is neutral at 53.3 and MACD is curving upward below the zero line.

Key levels:  The major support levels are seen at 1.1479 a bottom of the1.2262-1.1479 Swissie rally. Minor support will be encountered at 1.1561 a 10-day SMA. Dollar longs will experience major resistance at 1.1663 and 1.1781, a 23.6 Fib and 38.2 Fib Feb-Mar CHF rally f. A minor resistance is seen at 1.1675, a 20 day SMA.

Technical Overview



Chart of the Day - AUD/JPY

02/17
The Aussie completely reversed and has now established a full uptrend (both our R levels were disappointing). Aggressive buyers will step in at 81.70/90 in order to exploit the 10 SMA and the 23.6% Fibo from the Jan - Feb bull wave. The zone is the former breakout point and should now offer S. More conservative bulls will also keep in mind 80.00/50 thanks to the 100 and 50 SMA and a robust Fibo confluence (50% Fibo from the Jan - Feb bull wave & 38.2% Fibo from the Sep - Feb bull wave). Bears do not have many choices and reversals at 83.60/84.10 will be their only option thanks to the High B and 76.4% Fibo from the 97 - 00 bear wav

03/15
The 81.70/90 levels held as the synthetic continues to consolidate within the large upward sloping channel. Aggressive bulls would try to pick up the cross on the dips at the lower boundary of the consolidation range at 81.60. Break down of the range may see the pair trade to the channels lower boundary at 79.00. Shorts will be met by the resistance at the multiple Fib levels. Breakout to the upside can open 90.00 as a potential target. Indicators Stochastic are pointing to the range bound consolidation conditions with Stochastic showing a bearish divergence at 42.06. ATR, which shows volatility, fell indicating shrinking range, a condition that can lead to a violent breakout.  ADX is below 25, supportive of the ranging conditions. 

Technical Levels - London/New York


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15 March 2005 01:35 GMT