Weekly Trend Duration and Support/Resistance

TrendW

CURR

1 STD

2 STD

3 STD

ATR(13w)

S3

S2

S1

R1

R2

R3

EURUSD

Up

5

6

12

18

2.57%

1.3408

1.3521

1.3636

1.3871

1.3989

1.4106

GBPUSD

Up

4

6

12

19

1.88%

1.5820

1.5918

1.6017

1.6218

1.6319

1.6420

AUDUSD

Up

3

7

13

20

2.48%

0.9929

1.0010

1.0092

1.0259

1.0343

1.0427

NZDUSD

Down

1

9

17

26

2.95%

0.7299

0.7369

0.7441

0.7588

0.7662

0.7736

USDJPY

Down

1

4

9

13

1.90%

80.15

80.65

81.16

82.19

82.70

83.22

USDCAD

Down

15

4

9

13

1.63%

0.9619

0.9671

0.9723

0.9829

0.9882

0.9935

USDCHF

Down

1

7

14

21

2.78%

0.9030

0.9112

0.9196

0.9367

0.9453

0.9539

EURJPY

Up

5

4

9

13

2.26%

109.84

110.65

111.48

113.17

114.01

114.86

EURGBP

Up

1

5

11

16

2.17%

0.8349

0.8408

0.8469

0.8592

0.8653

0.8715

-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, bold magenta bars/candles indicate key reversals (classic definition) from a 13 week high/low and a range for the week that is at least as large as 13 week ATR. Light magenta bars indicate the largest range in 13 weeks

The price charts contain RSI signals (comparison of RSI and price extremes) over 26 weeks

Euro / US Dollar

Weekly

022511FXTW_body_eurusd.png, FX Technical Weekly

Prepared by Jamie Saettele

Jamie – The EURUSD is in a range but as mentioned last week, “the decline from 13861 is left as 2 equal waves, which is corrective. Multiple patterns could be unfolding from that level (triangle, flat or less likely at this point…an impulse). Trading above 13744 would put 13861 and then 14000 in focus.” The dominant pattern remains the 3 wave rally from 11875, so a push above 13861 is a candidate to fade. Do keep in mind the lower highs and lows from the 2008 high at 16000 as well.

Joel - The market remains very well bid, with key short-term resistance by 1.3745-65 being easily cleared to now put the focus on next topside barriers at 1.3860. The 1.3860 level represents the current yearly high, and a break above will then open the door for a fresh upside extension towards psychological barriers by 1.4000 which also guard against the more significant medium-term resistance at 1.4285 from November 2010. There is still however the risk that the market stalls out in the 1.3800’s, but a failure at or near 1.3860, and break back below 1.3700 would be required at a minimum to relieve current topside pressures.

British Pound / US Dollar

Weekly

022511FXTW_body_gbpusd.png, FX Technical Weekly

Prepared by Jamie Saettele

Jamie – Sideways trading continues in the GBPUSD and 16457 is resistance in the event of additional gains. However, 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 largely remains locked in some consolidation after continuously stalling out by and ahead of key resistance at 1.6300. From here, it is difficult to establish a clear directional bias and we will need to see a sustained break above 1.6300 or back below 1.6100 for additional clarity.

Australian Dollar / US Dollar

Weekly

022511FXTW_body_audusd.png, FX Technical Weekly

Prepared by Jamie Saettele

Jamie – The AUDUSD continues to advance, thus a bullish resolution to the sideways trade since October appears increasingly probabilistic. Only a break below 9803 would confirm a reversal to the downside. A move above 10256 would shift focus higher following a bullish triangle break towards 10500 or even 11000 (closer to 11000 is using traditional triangle measurement methods). Respect the potential for additional range trade as long as 10256 remains intact.

Joel - Although setbacks have stalled out for now ahead of 0.9800, we continue to favor risks for additional downside and like the idea of selling into current rallies. Ultimately, we see the market in the process of carving out a major top and any rallies from here should be well capped below 1.0150 on a close basis. Only back above 1.0200 gives reason for concern, while below 0.9945 should accelerate to 0.9800 and below.

New Zealand Dollar / US Dollar

Weekly

022511FXTW_body_nzdusd.png, FX Technical Weekly

Prepared by Jamie Saettele

Jamie – The NZDUSD has continued lower but found support just ahead of 7400. A drop below 7342 is needed in order to confirm that the NZDUSD completed wave b of a flat in late 2010. Until then, bullish potential does remain (although looking less likely) with the setback from 7975 serving as consolidation. A rebound to 7655 (4th wave extreme) cannot be ruled out.

Joel - Rallies continue to be very well capped and the market has once again stalled out in favor of yet another bearish reversal. From here, we see risks for additional declines towards 0.7300 over the coming sessions, with any intraday rallies expected to be well capped below 0.7600 on a close basis.

US Dollar / Japanese Yen

Weekly

022511FXTW_body_usdjpy.png, FX Technical Weekly

Prepared by Jamie Saettele

Jamie – I wrote last week that “a 26 week bearish RSI signal was triggered last week so caution is warranted.” In truth, the contracting USDJPY range since November appears more and more like a bearish triangle. Triangles are terminal patterns so a drop to a new low (and then a record low) would complete a multi decade decline in the USDJPY (long term Elliott wave pattern). The extent of the potential decline is in question – round figures such as 7500 would surely garner interest.

Joel - Although the market has come under some intense pressure in recent trade back below 82.00, overall price action remains largely consolidative and we would expect to see the market once again well supported in the 81.00’s. For now, 81.00 remains the key level to watch below, and only a close below this figure would negate the current range-bound price action and give reason for concern. As such, we like the idea of buying on dips into the 81.00’s in favor of a bullish reversal and close back above 82.00.

US Dollar / Canadian Dollar

Weekly

022511FXTW_body_usdcad.png, FX Technical Weekly

Prepared by Jamie Saettele

Jamie – 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). 10057 continues to serve as the pivot.

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. The 0.9800 figure seems to be offering itself as a formidable support zone for now, and any dips back towards or slightly below the figure over the coming sessions are viewed as an excellent opportunity to establish a very playable counter-trend long position. Ultimately, only a daily close back below 0.9750 would delay outlook and give reason for concern.

US Dollar / Swiss Franc

Weekly

022511FXTW_body_usdchf.png, FX Technical Weekly

Prepared by Jamie Saettele

Jamie – The USDCHF has traded to an all-time low thus negating the bullish stance that I had taken based on the prior low being just 50 pips below where the decline from 11730 would equal the decline from 12299. The long term support line does remain intact. The recent USDCHF action indicates just how difficult it is to call turns. Round figures are levels of interest (9200, 9100, etc).

Joel - The latest break to fresh record lows below 0.9300 is certainly concerning and threatens our longer-term recovery prospects. Still, we do not see setbacks extending much further and continue to favor the formation of some form of a material base over the coming weeks in favor of an eventual break back above parity. From here, big figures become key support as we are in unchartered territory, while a break back above 0.9400 would be required to relieve immediate downside pressures.

Euro / Japanese Yen

Weekly

022511FXTW_body_eurjpy.png, FX Technical Weekly

Prepared by Jamie Saettele

Jamie – 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. The 52 week average held as resistance this week and weekly RSI signals are bearish. I cautiously favor the downside.

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

Weekly

022511FXTW_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). A bearish stance is warranted 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, while rallies to 0.8600 should be sold aggressively.

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.

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