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Intraday Oscillators on USD Crosses Identify Daily Trend Potential

Intraday Oscillators on USD Crosses Identify Daily Trend Potential

2012-09-21 21:25:00
Jamie Saettele, CMT, Sr. Technical Strategist
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Dow Jones FXCM Dollar Index (Ticker: USDOLLAR)

Daily

Intraday_Oscillators_on_USD_Crosses_Identify_Daily_Trend_Potential_body_usdollar.png, Intraday Oscillators on USD Crosses Identify Daily Trend Potential

Prepared by Jamie Saettele, CMT

It was noted last week that “at some point, consolidation will take for at least several days and the USDOLLAR will rally, albeit in a corrective manner before additional losses. 9670 to the current level (9755) is a good place for consolidation to take place. 9820/60 is resistance.” The Dow Jones FXCM Dollar Index (Ticker: USDOLLAR) made it to the top of the estimated resistance this week, topping at 9855 Thursday. I’m looking lower towards the 61.8% retracement of the rally from the 2011 low at 9700 and 2012 low at 9672 before the bigger turn. Strength above 9855, while unexpected, would encounter resistance at 9894.

Euro / US Dollar

Weekly

Intraday_Oscillators_on_USD_Crosses_Identify_Daily_Trend_Potential_body_eurusd.png, Intraday Oscillators on USD Crosses Identify Daily Trend Potential

Prepared by Jamie Saettele, CMT

Last week’s commentary was that “trendline resistance (May 2011 and September 2011) is at about 13280 next week, which is also the May high. The luster of technical levels from the current level to 13280 increase the probability of a countertrend decline taking place. The goal is to identify the end of the countertrend decline in preparation for new highs. 13000/80 is estimated support.” I’m still treating the decline as corrective but the EURUSD dip below the bottom of the support zone (as low as 12919 Thursday before closing just under 13000 Friday) is disconcerting for bulls. If 12900 fails to hold, then expect a quick elevator ride down to 12816/54 demand kicks in. Support for longer term traders extends as low as 12740/55. I still prefer buying dips on a swing basis but intraday shorts into 13055/75 against the high are worth a shot given the potential for additional corrective action. Those wishing to play EUR weakness would do well to consider crosses.

British Pound / US Dollar

Weekly

Intraday_Oscillators_on_USD_Crosses_Identify_Daily_Trend_Potential_body_gbpusd.png, Intraday Oscillators on USD Crosses Identify Daily Trend Potential

Prepared by Jamie Saettele, CMT

“The GBPUSD has rallied through the trendline that extends off of the April and August 2011 highs. Focus is squarely on the May (and 2012) high at 16301…16130/75 is now support. Like all USD crosses, expect USD strength to prove corrective.” The GBPUSD made its low Thursday at 16163 and traded to 16309 Friday before closing near the lows of the day. 16300, the 2010 high and April 2012 high, is clearly important and today’s action confirms as much. 16035/70 is support in the event of a sharper reaction from the 52 week high. It’s worth playing a reversal on strength above 16257 (this ideas was discussed during the DailyFX PLUS webinar Friday).

Australian Dollar / US Dollar

Weekly

Intraday_Oscillators_on_USD_Crosses_Identify_Daily_Trend_Potential_body_audusd.png, Intraday Oscillators on USD Crosses Identify Daily Trend Potential

Prepared by Jamie Saettele, CMT

Last week’s focus was on identifying a low on ‘RSI dips to 50 on 240 minute charts and 40 on 60 minute charts.’ The AUDUSD dipped below the estimated 10400 support to 10367 but did close above the midpoint of the 10163-10636 range (midpoint is 10395). The deeper than expected pullback resulted in RSI dipping below 40 on the 240 minute chart and below 30 on the 60 minute chart. This change to the momentum profile decreases confidence in the immediate bullish potential and is suggestive of more sideways action at best. Bullish risk on longs should be kept the Thursday low as a drop below probably wouldn’t encounter support until 10287-10323.

New Zealand Dollar / US Dollar

Weekly

Intraday_Oscillators_on_USD_Crosses_Identify_Daily_Trend_Potential_body_nzdusd.png, Intraday Oscillators on USD Crosses Identify Daily Trend Potential

Prepared by Jamie Saettele, CMT

The NZDUSD has responded to resistance from the April high (and channel) but dips in intraday oscillators remain shallow. 240 minute RSI hasn’t dipped below 40 and 60 minute RSI hasn’t dipped below 30. These are conditions that attend a strong bull market. This is a description of what’s happened of course and the conditions can change. Until they do, it is best to stick with the current interpretation. 8256/70 is now support. I’m bullish against 8207. A drop below exposes 8130/70.

US Dollar / Japanese Yen

Daily

Intraday_Oscillators_on_USD_Crosses_Identify_Daily_Trend_Potential_body_usdjpy.png, Intraday Oscillators on USD Crosses Identify Daily Trend Potential

Prepared by Jamie Saettele, CMT

This is worth keeping an eye on but there is no change from the Daily Technicals.

Gold (spot)

Daily

Intraday_Oscillators_on_USD_Crosses_Identify_Daily_Trend_Potential_body_gold.png, Intraday Oscillators on USD Crosses Identify Daily Trend Potential

Prepared by Jamie Saettele, CMT

A short term triangle was proposed in the Daily Technicals last night for gold in which the metal would trade sideways for several more days before popping into 1800 and reversing. The break higher occurred earlier than anticipate and reversed SHY of the 1790 high from the February top. Notice too that price broke above the 61.8% retracement of the decline from the record before pulling back and closing near the lows (crude did the exact same thing last Friday before plunging this week). The presence of significant resistance, overextended market as per RSI (duration of reading > 70) and late week action indicate that risk is to the downside. A sharp drop into 1700/20 before a recovery isn’t out of the question.

--- 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.

Meet the DailyFX team in Las Vegas at the annual FXCM Traders Expo, November 2-4, 2012 at the Rio All Suite Hotel & Casino. For additional information regarding the schedule, workshops and accommodations, visit the FXCM Trading Expo website.

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

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