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FX Technical Weekly

FX Technical Weekly

2011-05-20 23:59:00
Jamie Saettele, CMT, Joel Kruger,
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Trend Table

SRIM,W,D – support/resistance index for month, week, day (higher number denotes strength-max is 9)

Time – Duration of current daily trend (negative indicates downtrend)

SRIM

SRIW

SRID

Time(Days)

USDX

3

0

0

11

EURUSD

(3)

0

0

(11)

GBPUSD

(3)

0

(1)

(9)

AUDUSD

range

0

1

2

NZDUSD

range

1

5

3

USDJPY

-

4

2

3

USDCAD

3

0

0

8

USDCHF

range

(2)

0

(5)

EURJPY

(3)

3

0

(12)

GBPJPY

(3)

0

0

(14)

CADJPY

(2)

1

1

(17)

AUDJPY

(1)

2

1

3

NZDJPY

(1)

4

3

3

EURGBP

(1)

3

(1)

(1)

EURCHF

(4)

(1)

0

(16)

EURCAD

-

3

(1)

(1)

EURAUD

(2)

3

(2)

(11)

EURNZD

(1)

1

(6)

(11)

GBPCHF

-

(3)

(2)

(31)

GBPCAD

+

1

(3)

1

GBPAUD

-

0

(2)

(11)

GBPNZD

-

(2)

(4)

(4)

AUDCHF

(2)

(3)

1

(5)

AUDCAD

+

1

3

44

AUDNZD

-

0

(5)

(3)

NZDCHF

(1)

(1)

4

1

NZDCAD

+

1

5

42

S&P

range

(1)

0

(1)

GOLD

range

0

3

1

SILVER

(3)

0

1

(13)

CRUDE

(9)

0

1

(13)

30YR

4

1

(1)

25

COPPER

(3)

3

2

(20)

CHARTS

-price bar chart

-base currency 10 yr interest rate in green

-counter currency 10 yr interest rate in red

-interest rate differential in black

-indicator that measures change in interest rate differential and change in price over 20 days is in blue (blue bar indicates strong bull move and warns of a top when no longer blue – red bar indicates strong bear move and warns of a bottom when no longer red)-referred to as JSINT

US Dollar (2yr and 10yr yields)

Daily

052011FXTW_body_usd.png, FX Technical Weekly

Prepared by Jamie Saettele, CMT

Jamie – After stalling at resistance from the 4/18 high and 3/7 low, the USD has traded back towards the highs today. Trading above 7600 would shift focus higher in a 3rd wave towards the 2/14 high and 200 day average at 7887-7932. Any weakness should find solid support at 7400/40.

JoelAlthough the overall downtrend has been quite intense, the market could be showing signs of basing following the latest impressive rebound. Look for a break back above the 1April high on to officially confirm bullish reversal prospects and accelerate gains. However, inability to establish above the 1Apr high will keep the pressure on the downside and open a retest of the recent trend lows. A more constructive weekly chart does help to reaffirm recovery outlook.

Euro / US Dollar

Daily

052011FXTW_body_eurusd.png, FX Technical Weekly

Prepared by Jamie Saettele, CMT

Jamie – As long as price is above 14050, potential remains for strength towards 14500-14600 in a larger correction. It is also possible that a more important B wave low is in place (as per the count above) but confirmation is lacking from short term price action. Trading below 14047 would negate any upside potential and shift focus to 13860-13900.

JoelThe corrective rally out from 1.4050 continues with the market breaking back above 1.4300 thus far. However, any additional gains from here should limited to the 1.4400-1.4500 area, and we would be looking for the formation of a fresh lower top in favor of the next major downside back below 1.4050. Ultimately, only a daily close back above 1.4500 would delay.

British Pound / US Dollar

Daily

052011FXTW_body_gbpusd.png, FX Technical Weekly

Prepared by Jamie Saettele, CMT

Jamie – The GBPUSD has tested channel support but additional weakness would target the 100% extension of the decline from 16476 is at 16041. A line that extends off of the May 2010 and December 2010 lows is just above there today. The channel defines the trend for now.

JoelThe market is starting to give way, with the price now dropping back below the 50-Day SMA to warn of additional declines over the coming sessions. Look for deeper setbacks below 1.6000, with any rallies now expected to be well capped ahead of 1.6400. Ultimately, only back above 1.6520 gives reason for concern.

Australian Dollar / US Dollar

Daily

052011FXTW_body_audusd.png, FX Technical Weekly

Prepared by Jamie Saettele, CMT

JamieContinue to look higher towards 10715. Trading above there would be an indication that a larger triangle or flat pattern is underway from the 11011 high. I showed my JSINT indicator this week (combination of interest rate and price trend). The current reading is at a level consistent with price lows. With a triangle or flat underway, I expect range trading to take hold over the next few weeks and perhaps months.

JoelLast Friday’s bearish price action has officially confirmed a fresh lower top by 1.0890 and further weakness appears to be in the cards from here. Look for a fresh downside extension and acceleration towards previous medium-term resistance now turned support by 1.0250. In the interim, any intraday rallies should be well capped below 1.0750 on a daily close basis.

New Zealand Dollar / US Dollar

Daily

052011FXTW_body_nzdusd.png, FX Technical Weekly

Prepared by Jamie Saettele, CMT

JamieThe NZDUSD continues to lead the pack – it is possible that a larger flat or triangle is underway from the May high (the implications in both patterns are for strength close to and possibly just above 8120 before weakness back towards 7750). Near term, favor the upside as long as price is above 7860 – an objective is 8040/50.

JoelThe latest break below 0.7820 is significant and suggests that a key top is now in place by 0.8120. From here, look for deeper setbacks towards next key support in the 0.7600’s by the 50/100-Day SMAs. The 10-Day SMA is showing a negative cross with the 20-Day SMA to further confirm negative outlook, and as such, any intraday rallies from here should be well capped below 0.8000 on a daily close basis. Below 0.7755 accelerates, while only back above 0.8000 concerns.

US Dollar / Japanese Yen

Daily

052011FXTW_body_usdjpy.png, FX Technical Weekly

Prepared by Jamie Saettele, CMT

Jamie – The USDJPY has broken to a new high for May which suggests that the low for the month is in place at 7956 (as per the tendency for the high OR low for the entire month to register during the first 5 days of the month). When combined with the fact that the USDJPY low was just below its 61.8% retracement of the rally from the March low, it is likely that an important secondary low is in place. Near term support is 8100/20 and price should remain above 8033 on its way towards resistance at 8325 and 8400.

JoelAfter undergoing a fairly intense drop off from the 85.50 area several days back, the market looks to have finally found some support by the bottom of the daily Ichimoku cloud and could be in the process of carving out some form of a base. Look for setbacks to continue to be well supported in the 80.00’s with only a close back below 79.50 to give reason for concern. From here we see the risks for a fresh upside extension back towards the recent range highs at 85.50 over the coming days.

US Dollar / Canadian Dollar

Daily

052011FXTW_body_usdcad.png, FX Technical Weekly

Prepared by Jamie Saettele, CMT

JamieThe USDCAD has traded above its prior month high for the first time since May 2010. The rally reversed however at the 100% extension of the rally from the low and channel resistance. With the rally in 3 waves, it is possible that the larger trend remains down (or a flat or triangle similar to patterns in the other commodity currencies). Trading above 9793 would trigger the alternate bearish count in which the rally is a series of 1st and 2nd waves. This is an extremely bullish count and focus would then shift to 9975.

JoelThe market has finally managed to mount a nice recovery since basing out by fresh multi-month lows in the 0.9400’s and could be in the process of attempting to establish a more meaningful base. The latest break and close back above 0.9700 triggers an inverse H&S pattern that now projects additional gains towards parity over the coming days. Look for setbacks to now be well supported above 0.9600 on a daily close basis.

US Dollar / Swiss Franc

Daily

052011FXTW_body_usdchf.png, FX Technical Weekly

Prepared by Jamie Saettele, CMT

Jamie – A close look at the USDCHF rally from the low reveals a 5 wave structure, which may compose the first leg of a larger bull move. At the moment, it is possible that the secondary low (either wave 2 or B) is in place at 8750. Additional weakness would target the 61.8% retracement at 8702.

JoelStarting to show signs of basing off of the recently established record lows by 0.8550, with the market putting in a solid bullish close for two consecutive weeks and breaking back above the previous weekly high. Next key resistance comes in by 0.9000 and a break above will further confirm recovery structure and open the door for a move back towards a medium-term lower top at 0.9340. Look for any intraday setbacks to be well supported above 0.8700 on a daily close basis. Ultimately, only a daily close back below 0.8700 delays and gives reason for concern.

Euro / Japanese Yen

Daily

052011FXTW_body_eurjpy.png, FX Technical Weekly

Prepared by Jamie Saettele, CMT

Jamie – The EURJPY decline from 12332 is clearly in 3 waves (to this point) and the reversal near parallel channel support increases confidence in a bullish bias. Initial support has been reached today at 11560 but additional weakness early next week should find support at 11520 and 11480. Weakness below there would begin to suggest that I am wrong in looking for higher prices.

JoelThe latest sharp pullbacks into the 113.00’s have been intense, although the market has now found some formidable support by the previous resistance area now turned support. Look for a fresh medium-term higher low to carve out above 113.00 ahead of the next major upside extension back towards and eventually through the recent highs by 123.35. Tuesday’s break back above Monday’s high already encourages outlook, while only a daily close below 113.00 concerns.

Euro / British Pound

Daily

052011FXTW_body_eurgbp.png, FX Technical Weekly

Prepared by Jamie Saettele, CMT

Jamie – Focus remains on the 9158 objective, which intersects short term channel resistance on June 6th and longer term channel resistance on June 17th. Price must remain above 8672 in order for the proposed bullish scenario to remain valid. Any weakness below 8672 would shift focus to the February high at 8592 and then the March low at 8460.

JoelThe latest break back above key medium-term resistance by 0.8940 may have proven to be a false break with the market sharply reversing back into the 0.8600’s thus far ahead of the latest minor bounce. From here, look for a lower top below 0.8900 and break back below 0.8670 to expose an even deeper setback and bearish resumption towards 0.8500. Any rallies should now be well capped ahead of 0.8900.

Jamie Saettele publishes Daily Technicals every weekday morning, COT analysis (published Monday), technical analysis of currency crosseson Wednesday and Friday (Euro and Yen crosses), and intraday trading strategy as market action dictates at the DailyFX Forex Stream. A graduate of Bucknell University, he holds the Chartered Market Technician (CMT) designation from the Market Technician Association. He is the author of Sentiment in the Forex Market. 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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