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US Dollar Rally Fails at October High

US Dollar Rally Fails at October High

2011-12-02 22:14:00
Jamie Saettele, CMT, Sr. Technical Strategist
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Trend Table (# indicates trend)

MONTH

S3

S2

S1

PL

P

PH

R1

R2

R3

@ES

1

1042.83

1095.17

1170.58

1178.63

1201.08

1223.54

1298.33

1350.67

1426.08

@US

1

132.00

135.44

138.41

140.86

141.03

141.20

144.81

148.25

151.22

AUDCHF

1

0.8538

0.8711

0.9050

0.8814

0.9006

0.9197

0.9562

0.9735

1.0074

AUDJPY

1

66.90

70.84

75.32

78.00

78.60

79.20

83.74

87.67

92.16

AUDUSD

0

0.8871

0.9267

0.9774

1.0076

1.0144

1.0213

1.0678

1.1073

1.1581

EURCHF

1

1.1792

1.1961

1.2119

1.1737

1.1917

1.2097

1.2446

1.2614

1.2773

EURJPY

(1)

94.72

98.60

101.48

104.96

105.56

106.17

108.24

112.12

115.00

EURUSD

(1)

1.2488

1.2850

1.3148

1.3552

1.3659

1.3765

1.3807

1.4168

1.4466

GBPUSD

(1)

1.4668

1.5045

1.5375

1.5726

1.5746

1.5766

1.6082

1.6460

1.6790

NZDUSD

(1)

0.6676

0.7023

0.7413

0.7855

0.7906

0.7957

0.815

0.8497

0.8888

USDCHF

1

0.8249

0.8505

0.8818

0.852

0.8723

0.8927

0.9387

0.9643

0.9955

USDJPY

1

74.04

75.31

76.46

77.55

77.57

77.59

78.87

80.14

81.29

WEEK

S3

S2

S1

PL

P

PH

R1

R2

R3

@ES

1

1094.08

1131.67

1187.58

1209.13

1220.58

1232.04

1281.08

1318.67

1374.58

@US

(1)

135.60

137.68

139.79

142.11

142.31

142.52

143.98

146.05

148.17

AUDCHF

1

0.8812

0.8949

0.9172

0.9165

0.9241

0.9318

0.9531

0.9668

0.9891

AUDJPY

1

72.11

73.99

76.79

77.65

78.30

78.95

81.46

83.33

86.14

AUDUSD

1

0.9346

0.9568

0.9889

1.0002

1.0071

1.0141

1.0431

1.0652

1.0974

EURCHF

1

1.2096

1.216

1.2249

1.2332

1.2334

1.2336

1.2402

1.2466

1.2555

EURJPY

(1)

100.50

101.78

103.13

104.52

104.55

104.58

105.77

107.04

108.40

EURUSD

(1)

1.2968

1.3113

1.3258

1.3438

1.3473

1.3509

1.3547

1.3693

1.3837

GBPUSD

(1)

1.5121

1.529

1.5443

1.5649

1.5703

1.5757

1.5764

1.5932

1.6085

NZDUSD

1

0.7192

0.7334

0.7554

0.7647

0.7689

0.7731

0.7916

0.8058

0.8278

USDCHF

1

0.8835

0.895

0.9077

0.9145

0.9165

0.9184

0.9318

0.9433

0.956

USDJPY

1

76.40

76.84

77.40

77.42

77.60

77.78

78.39

78.83

79.39

DAY

S3

S2

S1

PL

P

PH

R1

R2

R3

@ES

1

1215.33

1228.67

1236.08

1222.88

1229.75

1236.63

1256.83

1270.17

1277.58

@US

1

138.10

138.93

140.42

141.59

141.70

141.80

142.73

143.55

145.04

AUDCHF

1

0.9241

0.9292

0.9343

0.9316

0.9342

0.9369

0.9446

0.9496

0.9548

AUDJPY

1

77.98

78.68

79.13

79.01

79.20

79.40

80.29

80.99

81.44

AUDUSD

1

1.0032

1.0114

1.0162

1.0137

1.0161

1.0186

1.0291

1.0373

1.0421

EURCHF

1

1.2263

1.2292

1.2315

1.23

1.2313

1.2326

1.2367

1.2396

1.2419

EURJPY

(1)

102.26

103.19

103.84

104.49

104.50

104.51

105.41

106.34

106.99

EURUSD

0

1.3141

1.3251

1.3327

1.3402

1.3403

1.3404

1.3513

1.3624

1.3699

GBPUSD

(1)

1.5389

1.5483

1.5539

1.5614

1.5633

1.5652

1.5689

1.5782

1.5839

NZDUSD

1

0.7665

0.7713

0.7743

0.7708

0.7729

0.7751

0.7821

0.7869

0.7899

USDCHF

1

0.8995

0.9052

0.9128

0.9158

0.9173

0.9188

0.926

0.9318

0.9393

USDJPY

1

77.33

77.50

77.73

77.72

77.80

77.87

78.13

78.30

78.53

CHARTS

-price bar chart with Key Reversal (magenta)

-13 week and 52 week moving averages

Dow Jones FXCM Dollar Index (Ticker: USDOLLAR)

Weekly

US_Dollar_Rally_Fails_at_October_High_body_usdollar.png, US Dollar Rally Fails at October High

Prepared by Jamie Saettele, CMT

Jamie – The Dow Jones FXCM Dollar Index (Ticker: USDOLLAR) has plunged below a steep trendline support and reached early November highs (now support). The velocity of the decline certainly warrants questioning of the larger trend, especially in light of the divergence with RSI on the weekly (see video for more on this). Watch 9900 for resistance, which intersects a short term trendline.

Euro / US Dollar

Weekly

US_Dollar_Rally_Fails_at_October_High_body_eurusd.png, US Dollar Rally Fails at October High

Prepared by Jamie Saettele, CMT

Jamie – After drifting higher into and spiking after NFP, the EURUSD has fallen sharply into support from 13415. Keep an eye on support from 13340-70 (61.8% retracement of rally from the low and former short term resistance). Moves since the October low do not exhibit impulsive behavior (in either direction), which has me questioning the validity of a major breakdown even if the EURUSD does trade under 13145 in December. As such, I can envision a range trading month between close to current levels and 14000 before the major breakdown at a later date.

British Pound / US Dollar

Weekly

US_Dollar_Rally_Fails_at_October_High_body_gbpusd.png, US Dollar Rally Fails at October High

Prepared by Jamie Saettele, CMT

Jamie – The short term GBPUSD pattern is a bit clearer than the EURUSD in that the rally from 15422 is composed of 2 equal waves - the hallmark of a corrective move. Moreover, the rally fits well as a 4th wave within the decline from 16165. The implications are for weakness below 15422 prior to a recovery. Respect the potential for a range in December between roughly current levels and 16000 as long as 15271 is intact.

Australian Dollar / US Dollar

Weekly

US_Dollar_Rally_Fails_at_October_High_body_audusd.png, US Dollar Rally Fails at October High

Prepared by Jamie Saettele, CMT

JamieBoth the rally from the October low and subsequent decline into November are corrective, which has me thinking that a triangle or flat is underway. If a flat, then price would eventually exceed 10750. If a triangle, then the range will tighten from here. Resistance is 10445 and support 10090 and 9950. The NFP spike this morning is as good a time and place as any for at least a near term top. Look lower early next week into mentioned supports.

New Zealand Dollar / US Dollar

Weekly

US_Dollar_Rally_Fails_at_October_High_body_nzdusd.png, US Dollar Rally Fails at October High

Prepared by Jamie Saettele, CMT

JamieThe NZDUSD advance has stalled at what was support in early November. An extremely bearish outcome is possible (series of 1st and 2nd waves) and if we see short term bearish impulsive evidence then I’ll adopt a stance commensurate with that count. Until then, beware of a drift higher in a larger correction throughout the end of the year. Near term strength appears complete as per momentum and pattern. Support is 7720 and 7660.

US Dollar / Japanese Yen

Weekly

US_Dollar_Rally_Fails_at_October_High_body_usdjpy.png, US Dollar Rally Fails at October High

Prepared by Jamie Saettele, CMT

Jamie – There are signs that the long term USDJPY trend is reversing (from down to up). Those signs include bullish RSI divergence at the October low and a positive slope on the 13 week average. A push through the trendline that has defined the trend since the May 2010 high is required in order to inspire confidence in the upside. Objectives span the 8050-8300 range.

US Dollar / Canadian Dollar

Weekly

US_Dollar_Rally_Fails_at_October_High_body_usdcad.png, US Dollar Rally Fails at October High

Prepared by Jamie Saettele, CMT

JamieA well defined channel has characterized the trend since August and price has reached that channel this morning before reversing sharply. Quite simply, the series of higher highs and higher lows (definition of an uptrend) is intact above the October low of 9890. Furthermore, do not dismiss the long term potential inverse head and shoulders pattern (underway since April 2010). Near term resistance is 10255. Like other commodity crosses, we could be in for a range until 2012 (triangle or flat from October high).

US Dollar / Swiss Franc

Weekly

US_Dollar_Rally_Fails_at_October_High_body_usdchf.png, US Dollar Rally Fails at October High

Prepared by Jamie Saettele, CMT

Jamie The USDCHF is at long term resistance from “the channel that extends off of the 2009 and 2011 lows (with the parallel extending from the 2010 high). This channel resistance is reinforced by pivots (both support and resistance) from December 2010 to April 2011.” The USDCHF has traded off of its high but support is strong just under 9100, which was resistance in October and support in November. Favor the upside as long as price is above 9064 but be quick to pull the trigger on longs with the rally failing at resistance for 2 weeks now.

Euro / Japanese Yen

Weekly

US_Dollar_Rally_Fails_at_October_High_body_eurjpy.png, US Dollar Rally Fails at October High

Prepared by Jamie Saettele, CMT

Jamie – The EURJPY actually registered its lowest weekly close in over 10 years last week and created bullish divergence with RSI in the process (RSI is based on closing prices therefore RSI analysis should be done with closing prices). The decline from the April high takes the form of a 5 wave decline and channels perfectly (weekly closing prices). The combination of the weekly RSI divergence, 5 wave decline, and monthly key reversal (in October, which was followed by an inside month in November) makes the EURJPY a candidate for a major long term reversal. Price has trade to and exceeded its 20 day average, thus confirming near term upside momentum. The upside is favored against 10330.

Euro / British Pound

Weekly

US_Dollar_Rally_Fails_at_October_High_body_eurgbp.png, US Dollar Rally Fails at October High

Prepared by Jamie Saettele, CMT

Jamie – The break of a year and a half trendline in the EURGBP shifts focus to a developing channel and former long term resistance trendline. These lines intersect in early 2012 near the 2011 low of 8285. The bounce last week has nearly been entirely retraced as the confluence of the 13 and 52 week averages and October breakdown level held strong. Use last week’s high (8665) as risk on shorts. Focus remains on the 2011 low below 8300.

--- Written by Jamie Saettele, CMT, Senior Technical Strategist for DailyFX.com

To contact Jamie e-mail jsaettele@dailyfx.com. Follow him on Twitter @JamieSaettele

To be added to Jamie’s e-mail distribution list, send an e-mail with subject line "Distribution List" to jsaettele@dailyfx.com

Jamie is the author of Sentiment in the Forex Market.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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