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Swiss Franc Weekly Key Reversal on Huge Range

Swiss Franc Weekly Key Reversal on Huge Range

2011-08-12 23:04:00
Jamie Saettele, CMT, Joel Kruger,
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Trend Table

MONTH

S3

S2

S1

PL

P

PH

R1

R2

R3

@ES

(4)

1183.83

1231.17

1259.83

1295.71

1302.92

1310.13

1335.83

1383.17

1411.83

@US

3

118.01

120.21

124.17

124.67

125.82

126.97

130.32

132.52

136.48

AUDUSD

(2)

1.0096

1.0311

1.0651

1.0735

1.0821

1.0906

1.1206

1.142

1.1761

EURCHF

(1)

0.9909

1.0603

1.0957

1.157

1.1829

1.2088

1.2005

1.2699

1.3053

EURJPY

(1)

99.34

104.46

107.51

112.14

113.72

115.30

115.67

120.79

123.84

EURUSD

(1)

1.3224

1.3531

1.3964

1.4388

1.4392

1.4395

1.4704

1.5011

1.5444

GBPUSD

0

1.529

1.5535

1.598

1.6259

1.6314

1.6369

1.6669

1.6914

1.7359

NZDUSD

(1)

0.7648

0.7879

0.8335

0.8275

0.8447

0.8619

0.9021

0.9252

0.9708

USDCAD

2

0.9006

0.9206

0.9378

0.9586

0.9623

0.9659

0.975

0.995

1.0122

USDCHF

(1)

0.6952

0.7401

0.7628

0.8036

0.8217

0.8398

0.8304

0.8753

0.898

USDJPY

(1)

70.42

73.58

75.16

77.66

78.57

79.48

79.90

83.06

84.64

WEEK

S3

S2

S1

PL

P

PH

R1

R2

R3

@ES

(1)

994.17

1035.58

1106.17

1187.38

1198.00

1208.63

1218.17

1259.58

1330.17

@US

1

123.74

127.54

132.24

132.27

133.82

135.38

140.74

144.54

149.24

AUDUSD

(1)

0.9508

0.9717

1.0032

1.0398

1.0451

1.0503

1.0555

1.0764

1.1079

EURCHF

1

0.9372

0.972

1.0398

1.0891

1.0953

1.1015

1.1424

1.1772

1.245

EURJPY

(1)

102.62

105.32

107.28

109.85

110.47

111.09

111.93

114.63

116.59

EURUSD

(1)

1.3761

1.3932

1.4089

1.4262

1.4278

1.4295

1.4417

1.4588

1.4745

GBPUSD

(1)

1.573

1.592

1.6096

1.6278

1.6286

1.6293

1.6461

1.6651

1.6826

NZDUSD

(1)

0.7578

0.777

0.8045

0.8347

0.8375

0.8403

0.8512

0.8704

0.8979

USDCAD

1

0.9504

0.9633

0.975

0.9708

0.9761

0.9814

0.9997

1.0126

1.0243

USDCHF

1

0.6577

0.6822

0.7296

0.761

0.7664

0.7717

0.8015

0.8259

0.8734

USDJPY

(1)

73.68

74.99

75.84

77.21

77.74

78.26

78.00

79.31

80.16

DAY

S3

S2

S1

PL

P

PH

R1

R2

R3

@ES

1

1113.42

1130.08

1153.42

1144.88

1155.50

1166.13

1193.42

1210.08

1233.42

@US

(1)

134.20

134.77

135.85

136.98

137.03

137.08

137.51

138.08

139.17

AUDUSD

1

1.0157

1.0201

1.0273

1.0262

1.029

1.0318

1.039

1.0434

1.0507

EURCHF

1

1.04

1.0543

1.0809

1.0674

1.0808

1.0942

1.1218

1.1361

1.1628

EURJPY

(1)

107.54

108.03

108.63

109.37

109.50

109.63

109.72

110.21

110.81

EURUSD

(1)

1.4025

1.4087

1.4166

1.4248

1.425

1.4252

1.4308

1.437

1.4449

GBPUSD

1

1.6041

1.6103

1.6187

1.6223

1.6239

1.6255

1.6333

1.6396

1.648

NZDUSD

1

0.8055

0.8117

0.8218

0.8236

0.8264

0.8292

0.8381

0.8444

0.8545

USDCAD

1

0.9742

0.9788

0.9827

0.9866

0.9866

0.9866

0.9913

0.9958

0.9998

USDCHF

1

0.7379

0.7464

0.7617

0.7483

0.7578

0.7674

0.7854

0.7938

0.8092

USDJPY

(1)

75.95

76.23

76.46

76.73

76.76

76.80

76.97

77.24

77.47

CHARTS

-price bar chart with Key Reversal (magenta)

-RSI(14)

-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

Dow Jones FXCM Dollar Index (Ticker: USDOLLAR) & 2yr +10yr US yields

Daily

WeeklyTechnical081211_body_usd.png, Swiss Franc Weekly Key Reversal on Huge Range

Prepared by Jamie Saettele, CMT

Jamie – “After registering a record low, the Dow Jones FXCM Dollar Index (Ticker: USDOLLAR) rallied in 5 waves. The implications are bearish near term as a corrective setback is expected. 9500 is support. The USDOLLAR found support at its former 4th wave but the decline may be just wave a of the correction. In other words, a final test of 9500 is in order before the next bull leg gets underway.” The waves have exhibited mind-boggling structural clarity of late. A final test of 9515 may give way to the next sharp dollar rally and bout of risk aversion in general. This index has been useful in anticipating the recent moves in equities and ‘risk’ in general.

JoelThe market remains locked in a multi-day consolidation since basing out by yearly lows back in April. Ultimately however, until the consolidation is broken, buying on overdone interday dips towards the range lows and selling on exhausted rallies towards the range top by 9750 is the preferred strategy.

Euro / US Dollar

Daily

WeeklyTechnical081211_body_eurusd.png, Swiss Franc Weekly Key Reversal on Huge Range

Prepared by Jamie Saettele, CMT

Jamie – The EURUSD is expected to break its range soon but if the initial break is lower, it may complete a correction. The 100% extension of the decline from 14535-14055 at 13950 intersects channel support Monday. To review - “The decline from the May high is still left as a 3 wave decline…a drop under 14054 may complete a correction from 14535. Watch the short term channel for support.” The 200 day average at 13942 reinforces the area.

JoelThe market continues to adhere to a bearish sequence of lower tops since May, with a fresh lower top now in place by 1.4535 ahead of the next downside extension back towards and eventually below 1.4000. In the interim, look for any intraday rallies to be well capped ahead of 1.4400, while only back above 1.4500 delays.

British Pound / US Dollar

Daily

WeeklyTechnical081211_body_gbpusd.png, Swiss Franc Weekly Key Reversal on Huge Range

Prepared by Jamie Saettele, CMT

Jamie – Cable has traded sideways since the beginning of the month. Much like the EURUSD, the GBPUSD rally from the July low is constructive (5 waves) and the implications are for additional strength after a correction is complete from 16475. The GBPUSD has reversed from its 50% retracement but the EURUSD pattern suggests USD strength so respect the potential for a drop into the 61.8% retracement at 16045.

JoelThe market remains locked in a broader downtrend off of the April highs, and a fresh lower top is now sought out somewhere ahead of 1.6550 in favor of the next downside extension back towards the recent range lows at 1.5780. Ultimately, only a break back above 1.6550 would delay bearish outlook and give reason for pause, while back under the 200-Day SMA at 1.6085 should accelerate declines.

Australian Dollar / US Dollar

Daily

WeeklyTechnical081211_body_audusd.png, Swiss Franc Weekly Key Reversal on Huge Range

Prepared by Jamie Saettele, CMT

JamieThe decline from 11064 (truncation to that level) is an impulse and expectations are for a drop below 9927 before we see a more substantial recovery. I favor the idea that a secondary top is in place at 10412 as the decline from that level is an impulse (see 10 min chart). Exceeding 10443 would shift focus to 10525 and 10630 – levels at which I would be willing to attempt shorts again. An eventual low could form near the March low (9705) and 61.8% extension of the decline from 11064 or 50% retracement of the rally from the 2010 low at 9575.

JoelThe latest violent bearish reversal off of post-float record highs is significant with the market now looking to carve out a major top. The recent acceleration and close below 1.0390 has triggered a more ssubstantial topping formation that projects deeper setbacks towards 0.9700 over the coming sessions. In the interim, look for intraday rallies to be well capped ahead of 1.0600. The price is also contemplating the establishment back below the 200-Day SMA which further strengthens downside bias.

New Zealand Dollar / US Dollar

Daily

WeeklyTechnical081211_body_nzdusd.png, Swiss Franc Weekly Key Reversal on Huge Range

Prepared by Jamie Saettele, CMT

JamieThe NZDUSD bias is the same as the AUDUSD bias. That is, I am expecting a drop under 7963 before a larger advance. The bear leg ideally takes place with price staying under 8408. The confluence of the long term trendline and channel line may produce the low. This level is 7610 next week. If the decline fails to materialize from below 8407, resistance would come in at the former 4th wave extreme of 8465 and 100% extension of the rally from 7965, at 8505.

JoelThe latest violent bearish reversal off of post-float record highs is significant with the market now looking to carve out a major top. Next key support comes in by 0.7965, with a break and close below this level to trigger a more meaningful topping formation that will project deeper setbacks towards the 0.7750 area over the coming days. In the interim, look for intraday rallies to be well capped below 0.8500.

US Dollar / Japanese Yen

Daily

WeeklyTechnical081211_body_usdjpy.png, Swiss Franc Weekly Key Reversal on Huge Range

Prepared by Jamie Saettele, CMT

Jamie – The USDJPY is testing its record low and a break would shift focus to a Fibonacci measurement at 7258 (161.8% extension of initial decline from April high). A bounce above 7700 should see resistance at 7785-7830 (50-61.8 Fibonacci and former pivot levels) but I am looking lower near term as the recent sideways action likely composes a 4th wave.

JoelSetbacks have stalled out just ahead of the 76.25 record lows from March, with the market dropping to 76.30 ahead of the latest reversal. Given that we are seeing the rate by record lows, we would not at all be surprised to see the formation of a material base in favor of significant upside back towards the 82.00 area over the coming sessions. However, the overall structure still remains bearish and it will take a break back above 80.00 to officially alleviate downside pressures and confirm reversal prospects. Below 76.25 negates.

US Dollar / Canadian Dollar

Daily

WeeklyTechnical081211_body_usdcad.png, Swiss Franc Weekly Key Reversal on Huge Range

Prepared by Jamie Saettele, CMT

Jamie“After exceeding its 200 day average, the USDCAD also exceeded its June high thus confirming a double bottom with the May and July lows. The measuring technique reveals an objective just above 10400 (width of consolidation added to the breakout level). A new high may complete 5 waves up from the low. A setback to at least 9750 would present an opportunity to get long.” A line extended off of the May 2010 and September 2010 highs is at about 10050 this week.

JoelThe market has put in an impressive recovery since posting fresh yearly lows by 0.9400 several days back and while the bounce has been significant on a short-term basis, scope still exists for additional gains ahead with medium and longer-term studies still very much on the oversold side. The 200-Day SMA comes in by the 0.9800 figure and the recent break and close back above this longer-term moving average opens the door for a more sizable shift in the overall construct of the market and a sustained move back above parity. In the interim, look for any intraday setbacks to be well supported above 0.9600.

US Dollar / Swiss Franc

Daily

WeeklyTechnical081211_body_usdchf.png, Swiss Franc Weekly Key Reversal on Huge Range

Prepared by Jamie Saettele, CMT

JamieThe USDCHF rally (following efforts by the SNB to stem the rise of their currency) is unfolding in an impulsive manner (5 waves) and price is fast approaching a level that may cap the initial advance. The level is defined by the underside of a former support line, daily highs/lows and the 20 day average at 7800/50.

JoelThe latest sharp reversal off of record lows just shy of 0.7000 is encouraging and could finally be starting to signal the formation for a major base. A strong bullish close on Thursday ends a sequence of consecutive daily lower tops and also marks the first time in a while that the market has actually managed a close above the previous daily high. Look for any setbacks to be well supported ahead of 0.7400, while rallies could now extend back above 0.8000 over the coming sessions. Weekly studies are also confirming with the potential formation of a very bullish bottom close.

Euro / Japanese Yen

Daily

WeeklyTechnical081211_body_eurjpy.png, Swiss Franc Weekly Key Reversal on Huge Range

Prepared by Jamie Saettele, CMT

Jamie – The EURJPY has retraced the entire intervention but found support from a trendline that extends off of the 2010 and 2011 lows. Certainly the low could be tested but divergence with RSI at this low warns of a bounce. What’s more, the decline from the April high consists of 2 equal legs (often indicative of a correction). Initial resistance is 11035 then 11120.

JoelAny pullbacks below 110.00 continue to be very well supported by the previous multi-day resistance area from May 2010 through February 2011. Look for a fresh medium-term higher low to carve out around 110.00 (above 108.00) ahead of the next major upside extension back towards and eventually through the recent highs by 123.35. Ultimately, only a sustained break below 110.00 concerns.

Euro / British Pound

Daily

WeeklyTechnical081211_body_eurgbp.png, Swiss Franc Weekly Key Reversal on Huge Range

Prepared by Jamie Saettele, CMT

Jamie – The EURGBP rallied off of its 200 day average and trendline to test the late July high before reversing lower. One more run at 8882 cannot be ruled out as a new high would complete 5 waves up from the August low. A new high would create a high probability short opportunity as the move would complete a flat correction from the July low.

JoelWith the market once again stalling out above the 0.9000 psychological barrier, we could very well be seeing the formation of yet another medium-term top. Look for the recent close back below 0.8700 to confirm topping bias and accelerate declines towards 0.8300 further down. Next key support comes in by 0.8610, while rallies from here should be well capped ahead of 0.8900. Only back above 0.9050 ultimately negates.

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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