The EURUSD’s bullish rebound seems to have run out of steam for the time being. Resistance around 1.33 proved significant enough for the market to reevaluate the strength of any counter-trend moves when the dominant trend has been so prevalent for months. This level was defined by a number of notable technical levels including the region’s stance as a former level of support; a falling trend of highs through October; and the 50% Fibonacci retracement of the September 22nd to October 28th bear leg.
The EURUSD’s bullish rebound seems to have run out of steam for the time being. Resistance around 1.33 proved significant enough for the market to reevaluate the strength of any counter-trend moves when the dominant trend has been so prevalent for months. This level was defined by a number of notable technical levels including the region’s stance as a former level of support; a falling trend of highs through October; and the 50% Fibonacci retracement of the September 22nd to October 28th bear leg. As this downdraft unfolds, 1.2920 and 1.2720 may stand as temporary support; but the bigger target is the two-year swing low set just days ago at 1.2320.
In the short-term USDJPY has turned to congestion – a turn that has occurred in the absence of many notable levels of technical support or resistance. Nonetheless, price action on the lower frequency charts reveals a build up in pressure. A modest ceiling has stepped in for the pair around 99.00/50 – in proximity to the 100-bar SMA (on a 240-minute chart) and a notable Fib retracement on the September 19th to October 24th decline. These levels are not overwhelming obvious and therefore their influence may not hold up should volatility return. We are watching the development of momentum in the reversal from last week’s lows. Should it hold up, an upside break would be easily accomplished – though firmer ground at 103 could cut a run short. On the other hand, should the short-term rising trend be under undermined, we will target the 91 – 94 congestion zone.
Another major whose rebound seems to be winded, GBPUSD is stalling at notable resistance. From the limited price history on this chart, we can see a 38.2% retracement of the September 25th to October 24th bear leg at 1.6550. However, if we go to a daily chart and take in seven years of price action, we can see that this level is far more significant as a 61.8% Fib of the June 2001 to November 2007 bull run. And, while it seems that the market has pushed these levels on the lower time frame, we haven’t seen a daily bar close above this level to challenge its influence. In fact, should spot close around current levels, it would make for a good shooting star and therefore make a strong case for a reversal.
Though a higher time frame chart shows USDCHF is at the intersection of two major trends (a general rise from the July bullish trend change and the larger falling trend from September of 2002), a lower frequency shows the prevalence of congestion zones. After pulling back to 1.12 yesterday and reversing course on the 50% Fib (of the September 22nd to October 24 advance) in the area. However, today’s sharp reversal may not usher in the second wind for bulls either. Aside from the notable pivot level at 1.15, the 50% retracement of the October 24th to 30th downswing is at least temporarily holding back further advances.
Take advantage of the clear and consistent trends in USDCAD while you can. This pair – which has a history of frustrating congestion and frequent false breakouts – has presented us with a series of very clear trends with impressive momentum. However, with the reversal on 1.30 and subsequent turn down at 1.19, the markets forces seem as they are already beginning to balance. The turn from 1.19 seems to be in response to the 38.2% retracement of the September 28th to October 28th rally at 1.1975 (which seems a better hold when seen from a daily time frame. Should the current advance die out early, it may be a sign that congestion is taking over once again.
We are starting to see the first true signs of capitulation in the AUDUSD’s rebound. A hold at the short-term falling trendline starting with the October 7th high at 0.69 is modest at best. However, a 38.2% retracement of the September 22nd to October 27th bear wave 60 points higher offers some level of stability. Short-term direction will depend on whether 0.70 or 0.65 falls first. On the other hand, the recent rebound is modest when scaled against the major downdraft that has overtaken the pair for the past three months.
In the NZDUSD’s reversal from its five-and-a-half year low, resistance at 0.6000/50 is minor. With a general (but messy) falling trendline crossing paths with a 20-day SMA and a 38.2% Fib (which is holding up on a daily frequency chart), there seems to have been enough there to stall an otherwise aggressive 650-point rally. However, as this ceiling holds little relevance beyond the general dominant trend of the market, a break to the upside should not be discounted.