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FX Technical Weekly

FX Technical Weekly

2011-02-11 23:59:00
Jamie Saettele, CMT, Joel Kruger,
Share:

Weekly Trend Duration and Support/Resistance

TrendW

CURR

1 STD

2 STD

3 STD

ATR(13w)

S3

S2

S1

R1

R2

R3

EURUSD

Up

4

6

12

18

2.74%

1.3186

1.3304

1.3424

1.3671

1.3794

1.3918

GBPUSD

Up

3

6

12

19

2.03%

1.5688

1.5792

1.5898

1.6114

1.6223

1.6331

AUDUSD

Up

2

7

13

20

2.58%

0.9768

0.9851

0.9935

1.0106

1.0192

1.0279

NZDUSD

Up

2

9

17

26

3.10%

0.7375

0.7450

0.7526

0.7683

0.7761

0.7840

USDJPY

Up

1

4

9

13

1.97%

81.80

82.33

82.87

83.96

84.51

85.05

USDCAD

Down

13

4

8

13

1.71%

0.9716

0.9771

0.9826

0.9938

0.9995

1.0051

USDCHF

Up

1

7

14

21

2.64%

0.9479

0.9561

0.9644

0.9815

0.9900

0.9986

EURJPY

Up

4

4

9

13

2.46%

110.29

111.18

112.08

113.93

114.85

115.78

EURGBP

Up

1

6

12

18

2.15%

0.8282

0.8340

0.8400

0.8521

0.8581

0.8642

-TrendW is weekly trend and CURR denotes how long the current trend has been underway in weeks. 1,2,3 STD are 1st,2nd, and 3rd standard deviations of the duration of trends measured over the last 150 weeks (3 years).

-ATR(13w) is 13 week average true range expressed as a percentage

-On the charts below, magenta bars/candles indicate key reversals (classic definition) from a 20 day high/low and a range for the week that is at least as large as 20 day ATR

The price charts contain RSI signals (comparison of RSI and price extremes) over 2 different periods, 20 and 60 days

Euro / US Dollar

Daily

021111FXTW_body_eurusd.png, FX Technical Weekly

Prepared by Jamie Saettele

Jamie – The EURUSD closed near its weekly lows for the second consecutive week but more importantly confirmed a downtrend by trading below 13507. The stage is set for additional weakness towards former support at 13456 and former support at 13244. In Elliott parlance, the decline from 13744 is either a 3rd wave or c wave and measured objectives line up with the mentioned levels. A bullish RSI signal was registered yesterday on a 20 day basis but the 60 day remains bearish (as per the bearish signals at the end of January). I am bearish against 13861.

Joel - The latest rallies have stalled out well ahead of 1.3860 with the market finding some resistance by an ideal right shoulder top in the mid-1.3700’s ahead of the latest sharp setbacks. From here, the risks are tilted to the downside, with a break and close back below 1.3570 to like trigger the H&S topping formation and open a fresh downside extension towards the 1.3200 area over the coming days. Any rallies should continue to be well capped ahead of 1.3700 with only a break back above the figure to give reason for concern.

British Pound / US Dollar

Daily

021111FXTW_body_gbpusd.png, FX Technical Weekly

Prepared by Jamie Saettele

Jamie – A GBPUSD harami candle pattern formed on the weekly, which furthers the argument that a top of some importance is in place at 16278. Previously cited bearish evidence included 5 waves up from 15345 and the key reversal on 2/3 (see bold magenta bar). Keep the long term pattern in mind, which I believe is a triangle from the January 2009 low. The pattern should result in weakness towards 14780 (wave D) in the months ahead. The lower triangle line intersects with 14780 in April.

Joel - The market looks to have once again found a meaningful top by the 1.6300 barrier, with the latest setbacks resulting in a series of daily lower tops. From here we look for a break and close back below 1.6000 to confirm bias and accelerate declines back towards 1.5750 over the coming sessions. A daily close back above 1.6200 would give reason for concern, while ultimately only back above 1.6300 negates.

Australian Dollar / US Dollar

Daily

021111FXTW_body_audusd.png, FX Technical Weekly

Prepared by Jamie Saettele

Jamie – View the AUDUSD on a daily or weekly chart and you’ll see a potential head and shoulders top although the neckline is quite steep. With a potentially completed Elliott wave pattern (5 waves) from the 2008 low (6000), the risk of a sharp reversal and decline does remain. However, bears need a break below 9803 in order to confirm such a reversal. The fact that the high for the year remains the 1st trading day of the year is significant.

Joel - Rallies continue to remain very well capped ahead of 1.0200 to suggest that the key post-float record highs from late 2010 by 1.0260 will remain intact. Thursday’s sharp bearish reversal and Friday’s subsequent break back below parity now open the door for additional declines towards next key multi-day range support by 0.9800 over the coming days. Any intraday rallies should now be very well capped ahead of 1.0135.

New Zealand Dollar / US Dollar

Daily

021111FXTW_body_nzdusd.png, FX Technical Weekly

Prepared by Jamie Saettele

Jamie – After a gravestone doji last week, the NZDUSD closed this week at its 50 day average (in red). With the fresh 2011 high made last week, a drop below 7524 (2011 low to date) would confirm a reversal. I maintain that the NZDUSD completed wave b of a flat in late 2010. 5 waves down are visible from 7975 so the probability is increased that wave c down is underway. A break below 7342 is needed to confirm that the b wave high is in place and that the NZDUSD is headed for an eventual break below 6560.

Joel - Rallies continue to be very well capped above 0.7800 and the market has once again stalled out above the figure in favor of yet another bearish reversal. From here, we see risks for additional declines towards 0.7525 over the coming session, with any intraday rallies expected to be well capped ahead of 0.7700. A daily close below 0.7525 should accelerate declines and open the door for deeper setbacks into the 0.7300’s.

US Dollar / Japanese Yen

Daily

021111FXTW_body_usdjpy.png, FX Technical Weekly

Prepared by Jamie Saettele

Jamie – “One can view the USDJPY action since November as consolidation prior to a continuation of weakness or a basing pattern that will lead to a break higher.” This week’s strong rally clarifies the picture as I had pegged 8321 as the bullish pivot. The break above that level favors the idea that the sideways trade since the November low is a bullish base rather than a triangle. Focus is on 8450 and 8110 is critical to the bullish bias.

Joel - The market continues to remain extremely well bid on dips below 82.00, with the latest surge back above 83.00 really encouraging longer-term recovery prospects and opening the door for a potential break of key topside resistance by 84.50 over the coming days. Longer-term cyclical studies certainly suggest that the market could be poised for a major bullish reversal and we would look for a break and weekly close back above 84.50 to help confirm outlook. A break back below 82.00 would concern, while ultimately, only a back below 81.00 would negate.

US Dollar / Canadian Dollar

Daily

021111FXTW_body_usdcad.png, FX Technical Weekly

Prepared by Jamie Saettele

Jamie – The USDCAD reversed for the 3rd consecutive month at the confluence of trendline resistance / 50 day average. The 13 week average continues to hold and the downside must be respected. Focus is on the downward sloping trendline drawn off of the August and October lows as well as 9710 (February 2008 low). This week’s candle did close as a gravestone doji, which indicates indecision. 10057 defines the trend.

Joel - Daily studies are starting to look a little stretched, and this in conjunction with longer-term cyclical studies which warn of a major base, leave us looking for opportunities to buy rather then selling into the downtrend. A bullish outside week a few weeks back helps to encourage our outlook and we look for added confirmation on a daily close back above 1.0060. Only a close back below 0.9800 will ultimately give reason for concern.

US Dollar / Swiss Franc

Daily

021111FXTW_body_usdchf.png, FX Technical Weekly

Prepared by Jamie Saettele

Jamie – I maintain that “a major low was put in place in the final week of 2010.” The low, right at 9300, was just 50 pips below where the decline from 11730 would equal the decline from 12299. What’s more, the low occurred at a support line and was accompanied with RSI divergence. Based on long term wave structure, this rally from 9300 is probably a C wave and should be sharp. Trading above 9784 would bolster the bullish outlook an shift focus to the December high at 10065.

Joel - Although the longer-term market remains under some intense pressure with the latest declines stalling just shy of the late 2010 record lows at 0.9300, inability to establish fresh record lows followed by a break back above 0.9500 leaves us constructive with our outlook from here. Next key topside barriers come in by 0.9785 and we now look for a weekly close above this level to accelerate gains and open a fresh upside extension back above parity and towards 1.0070 medium-term resistance from December 2010. Any setbacks from here are expected to be well supported ahead of 0.9500.

Euro / Japanese Yen

Daily

021111FXTW_body_eurjpy.png, FX Technical Weekly

Prepared by Jamie Saettele

Jamie – The EURJPY path is not especially clear. A diamond pattern appears to be forming since the June 2010 low and a break above 11500, which has capped gains since July 2010, would shift focus to the February 2010 low at 11964. With the 20 day average holding as support this month, a bullish outcome is looking more and more likely.

Joel - The market remains very well supported on dips with the overall price action defined as consolidative. However, given where the market trades historically, we continue to like the idea of being buyers down by current levels in favor of a major bullish reversal over the coming months. For now, key resistance comes in by the multi-week consolidation highs at 115.70, and a break and close back above this level will be required to officially force a shift in the structure. In the interim, buying dips towards 110.00 is favored.

Euro / British Pound

Daily

021111FXTW_body_eurgbp.png, FX Technical Weekly

Prepared by Jamie Saettele

Jamie - A long term complex 4th wave correction remains underway in the EURGBP. Expectations are for continued weakness towards a channel line that intersects with the former 4th wave extreme at 7692 at the end of April. Price remains below important moving averages (20 and 50 day) and daily wave structure warrants a bearish stance against 8672.

Joel - The market continues to adhere to some major falling trend-line resistance, with the latest topside failure off of the channel top opening an acceleration of declines back below 0.8500. From here the risks are for additional declines over the medium-term with sights set on a move to fresh yearly lows by critical psychological barriers at 0.8000. Ultimately, only back above 0.8700 would negate and give reason for concern.

Jamie Saettele publishes Daily Technicals every weekday morning, COT analysis (published Monday), technical analysis of currency crosseson Monday, Wednesday, and Friday (Euro and Yen crosses), and intraday trading strategy as market action dictates at the DailyFX Forex Stream. He is the author of Sentiment in the Forex Market. Past presentations on technical analysis are available to view. Send requests to receive his reports via email to jsaettele@dailyfx.com.

If you wish to receive Joel’s reports in a more timely fashion, emailinstructor@dailyfx.com and you will be added to the distribution list.

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