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US Indices – The Dow average is at its highest level since May 2008 and the S&P is testing its July high (2011 cash basis high is 1370.58). The Nasdaq meanwhile is at its highest level since December 2000 and daily RSI is above 79. Since the tech bubble burst, daily RSI has been above 79 on only 2 occasions, mid April 14/15, 2010 and November 4-8, 2010. Tops occurred on April 26th (dip, new high, and FLASH CRASH) and 11/9 (drop into 11/17 before additional rally). Given the heightened emotion (excitement) surrounding the Nasdaq’s elevated level, I’ll be following this index more closely. The larger support zone to watch in the coming weeks is 2782-2835.
USDOLLAR (Ticker: USDOLLAR): Remains vulnerable to fresh lows towards the November low at 9665. A drop below 9665 exposes the next level of support, which isn’t until the trendline that extends off of the July and October lows near 9600.
EURUSD – The break above end of January / early February consolidation is expected to extend towards the mid 13400s. The 50% retracement of the decline from the October high comes in at 13435 and bullish channel resistance is just above that level. A drop under 13214 exposes 13170.
Prepared by Jamie Saettele, CMT
AUDUSD – Yesterday’s doji may signal that a decline (although probably in a 4th wave) is about to commence. 10690 is probable support. If the advance continues without any hiccups, then 10900 is in focus.
NZDUSD – The long wick above today’s candle may signal the beginning of a corrective decline (4th wave) down to 8250. 8250 is former resistance (1/27 high) and Elliott channel support reinforces this level (at 8235 Thursday and 8254 on Friday).
USDJPY – The USDJPY is nearing an important level in 7730, which was the 1/6 high, 1/19 high, and 1/26 low. The 50 day average also comes into play at 7725. I maintain a constructive bias on the pair as long as price is above 7600 but respect the potential for a reaction from 7730.
--- Written by Jamie Saettele, CMT, Senior Technical Strategist for DailyFX.com
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