FOREX ALERTS >>
DailyFX Plus Login

picking tops and bottoms

Article

FX Technical Weekly
Friday, 18 September 2009 20:41:44 GMT  |  Jamie Saettele, Senior Currency Strategist, Joel Kruger, Technical Currency Strategist
Delicious
Facebook

The GBPUSD and GBPJPY exhibit the clearest mutli month classical patterns (potential head and shoulders and double top).  1.4850 is a level to watch for a reversal in the EURUSD.  The USDJPY is breaking through a steep resistance line; a short covering rally could reach the mid 93.00s. 

 EURO / US DOLLAR

FXTA9-25-09

 

Joel: The intense rally has stalled for now by 1.4845 with the market now in the process of attempting to carve out a meaningful top. Gains had accelerated earlier in the month with the market being well supported by the 10-Day SMA. However, the price has since dropped back below the 10-Day and this puts the focus back on the more ciritcal medium-term support in the form of the 50-Day SMA by 1.4365.     
Jamie: The EURUSD has dropped below a short term support line (red) and focus is now on the lower end of the short term channel (green)/trendline support (black).  1.4410/50 is the level at which a bounce has a high probability of materializing.  Short term structure is unclear at this point but favor the downside.  If a rally does unfold, then look to 1.4740/60 as resistance.

 FXTB9-25-09

 BRITISH POUND / US DOLLAR

FXTC9-25-09

 

Joel: The much talked about neckline of the major h&s topping pattern has now finally been triggered with the result to likely now open a measured move decline towards the 1.5000 area over the coming weeks. However, daily studies do show room for a bounce given the severe decline over the past several days, and we would recommend looking to sell into rallies towards 1.6200-1.6300. Next support by 1.5800.
Jamie: Having broken h&s neckline support, the next levels of interest in the GBPUSD are 1.5800 and 1.5728.  Former resistance is now potential support in the 1.6110/30 zone.  The underside of the neckline is also resistance going forward.

 FXTD9-25-09

 AUSTRALIAN DOLLAR / US DOLLAR

FXTE9-25-09

 

Joel: We continue to hold our bearish bias at current levels despite recent price action with the market recently just squeaking out fresh 2009 highs by 0.8785 ahead of the latest minor pullback. However, a daily double top could not be in the works with a break below the neckline at 0.8590 to confirm and open deeper setbacks towards 0.8400 over the coming days. Above 0.8785 negates.
Jamie: It is worth noting that the rally from .6245 is now exactly double the size (in price) as the .6005-.7275 advance.  A and C waves sometimes relate to each other by factors of .618, 1, 1.618 or 2.  Short term channel support has been broken.  Target former resistance levels of .8484 and .8270.

 FXTF9-25-09

 NEW ZEALAND DOLLAR / US DOLLAR

FXTG9-25-09

 

Joel: The market is now threatening 11 consecutive weekly positive closes with a close above 0.7100 on Friday to confirm. But daily and weekly studies are overbought so we would be more inclined to look for opportunities to fade the current moves rather than buy into them. Look to sell on a daily close below 0.7100.
Jamie: The topline of a channel since July and the midline of a channel since March rejected the advance.  A short term support line is holding now but is expected to ‘give’ sooner than later.  The drop below will expose the channel’s lower boundaries as well as former resistance at .6900.

 FXTH9-25-09

 US DOLLAR / JAPANESE YEN

FXTI9-25-09

 

Joel: While the overall structure remains intensely bearish, the recent weakness leaves daily studies in need of a healthy corrective bounce. Look for the 90.10 (coincides with 78.6% fib retrace of yearly low-high) lows to hold for now ahead of some corrective upside over the coming days back towards 93.30. Below 90.00 however will open next drop to 87.15.
 
Jamie: Keep the long term outlook in perspective - “a 4th triangle ended in 2007 above 124.00 therefore the decline from that level is viewed as a 5th wave that will not be considered complete until price drops to an all-time low (below the 1995 low near 80).”  After a retracement that exceeded former support, the USDJPY has made a new low.  A trendline is redrawn (in dark…see the former line in a lighter shade), which is now potential resistance.  Remaining beneath 92.55 keeps the trend pointed down with a focus on 87.10 (AND BELOW).

 FXTJ9-25-09

 US DOLLAR / CANADIAN DOLLAR

FXTK9-25-09

 

Joel: Price action has been extremely choppy and the smooth recovery that we had anticipated out from the 1.0600’s has not gone as smoothly as we had hoped. Nevertheless, the market does seem to have found a formidable support by 1.0600 and our core constructive bias is intact. We continue to look for the formation of a medium-term higher low by 1.0600 and above the 2007 historic 0.9055 lows, ahead of fresh upside into the 1.2000’s.
Jamie: Having held the 61.8% retracement of the rally from .9055 and broken above channel resistance, focus is now on 1.1130. 

 FXTL9-25-09

 US DOLLAR / SWISS FRANC

FXTM9-25-09

 

Joel: While the market has been nothing but bearish over the past several weeks, our bias is very bullish at current levels with daily studies looking stretched and the price finally testing the 78.6% fib retrace off of the major 2008 low-highs.  Have established a long position on Thursday at 1.0215 and look forward to holding over the coming days in anticipation of a move back into the 1.0500’s.
Jamie: The USDCHF doesn’t have the reversal characteristics of the other USD pairs (EURUSD and NZDUSD reversing from channels, AUDUSD breaking channel support, GBPUSD large h&s, USDCAD short term h&s) but the wave count warns (and has been warning) of a significant low. 
 

 FXTN9-25-09

 EURO / JAPANESE YEN

FXTO9-25-09

 

Joel: Confined to the middle of a multi-week range, with the market most recently failing by the range highs ahead of 140.00 and rolling back over. Our bias is mildly bearish over the coming weeks and we look for a drop back into the lower range by 125.00-127.00
Jamie:  For the past 6 + months, the pair has traded in a large sideways (slightly contracting) range.  The pattern could be just a consolidation prior to additional gains or a significant distribution and therefore reversal.  There is the specter of a head and shoulders top.  Coming under the neckline (at 130.01 on Monday and increasing about 5 pips per day) would turn conditions decidedly bearish.      
 

 FXTP9-25-09

 BRITISH POUND / JAPANESE YEN

FXTQ9-25-09

 

Joel: Has broken below the major neckline by 146.80 that we had written about in previous commentary and the market could be looking for some bearish continuation ultimately back into the 120.00’s over the coming weeks. That being said, the aggressive move lower this week has left daily studies deeply in oversold territory and we would recommend staying on the sidelines or selling rallies towards 150.00.
Jamie: The GBPJPY has broken down.  Now beneath the 200 day SMA, focus is on 139.17 (100% extension and an April pivot) and then 130.40-131.40 (161.8% extension and a March pivot).  The line extended from the August and 9/23 highs can be used as a point of reference from which to short.  Of course, one may not even get the chance to do so before 139.17 is reached.  145.50 and 146.30/75 are resistance  levels prior to the line.  150.44 is risk for bears.
 

 FXTR9-25-09

 EURO / BRITISH POUND

FXTS9-25-09

 

Joel: We have been dead wrong with this one and it has cost us for it too. The market has surged through psychological barriers at 0.9000 to put the pressure back on the topside. While we are done recommending positions here for now, we still hold onto an overall bearish bias with a medium-term lower top sought out below 0.9500 ahead of the next major decline.   
Jamie:  The EURGBP continues higher and is approaching the initial target of .9269.  A rally through there exposes the potential resistance line drawn off of the August highs and then .9507.  As has been the case for weeks, “I have labeled the decline from .9807 as A-B-C, which is corrective.”  The character of the rally from .8399 is not corrective so a new high (above .9807) seems probable.  There will be retracements along the way, and I’ll attempt to identify them in real time.  Support (former resistance) is.9087.  Watch the lower parallel for support as well.    

 FXTT9-25-09

 

TRADE LIST *Entry prices for trades that are recommended ‘at market’ are listed as the price at the time of publication

FXTU9-25-09

 

More Articles

Feedback Form