Prices completed a bearish Three Inside Down candlestick pattern below falling trend line resistance set from May 2011 and broke through upward-sloping support set from the June swing bottom, hinting a significant reversal is at hand. Initial support lines up at 1.2826, the 23.6% Fibonacci expansion level. A reversal back above the trend line (now at 1.3009) exposes a long-term downward-sloping barrier at 1.3094.
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Prices are testing support in the 79.53-60 area marked by the August 17 close and the 23.6% Fibonacci retracement. A break below that exposes the 38.2% level at 79.13. Near-term resistance is at 80.39, with a break above that exposing the 81.00 figure. We continue to hold a long position from 78.67.
Daily Chart - Created Using FXCM Marketscope 2.0
Prices are pulling back from falling trend line resistance set from mid-September (1.6138) eyeing support at the 1.60 figure. A break below that targets the 38.2% Fibonacci retracement at 1.5911. Alternatively, a reversal back above the trend line on a daily closing basis broadly exposes the 1.63 mark.
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Prices broke about falling trend line resistance set from the July swing high, exposing the next upside barrier at 0.9420. A further push above that targets the 38.2% Fibonacci retracement at 0.9503. Trend line resistance-turned-support is now at 0.9295. A drop back below that targets the 0.9213-34 area.
Daily Chart - Created Using FXCM Marketscope 2.0
Prices continue to push higher after taking out resistance at 0.9943, the 38.2% Fibonacci retracement, with buyers clearing the parity barrier to expose the 50% level at 1.0039.The 0.9943 level has been recast as support, with a drop back below that targeting the 0.9819-44 area. Overall positioning continues to favor a move to a measured upside target at 1.0140 after the pair completed an inverse Head and Shoulders bottom on October 19.
Daily Chart - Created Using FXCM Marketscope 2.0
Prices are testing resistance at 1.0397, the 23.6% Fibonacci expansion level. A break higher exposes a major falling trend line at 1.0514, a hurdle reinforced by the 38.2% Fib at 1.0551. Near-term support lines up at 1.0173, a horizontal barrier that has contained the downside over the past three months, with a push lower broadly exposing the parity level.
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Prices put in a Bullish Engulfing candlestick pattern above support the bottom of a rising channel set from late May (0.8142), a barrier reinforced by the lower boundary of a smaller falling channel established from the September 14 swing high (0.8096). The setup hints a move higher is ahead. Initial resistance is at 0.8241, with a break above that exposing a long-term trend line now at 0.8328.
Daily Chart - Created Using FXCM Marketscope 2.0
Prices broke support at 103.22 after completing a bearish Dark Cloud Cover candlestick pattern to challenge the next downside barrier 102.51. This juncture is reinforced by a rising trend line set from late July, now at 102.16. A break below that exposes the 38.2% Fibonacci retracement at 100.58. Alternatively, a push back above 103.22 targets 104.61.
Daily Chart - Created Using FXCM Marketscope 2.0
Prices put in a Dark Cloud Cover candlestick pattern below resistance at the top of a rising channel set from early June, hinting a move lower is ahead. Initial support lines up at 127.01, the 23.6% Fibonacci retracement. A break below that exposes a rising trend line set from August (125.68) and the 38.2% Fib at 124.16. Channel resistance is now at 129.51.
Daily Chart - Created Using FXCM Marketscope 2.0
Prices are edging higher from support at a rising trend line set from late July (0.8022), a barrier reinforced by the 38.2%Fibonacci retracement at 0.8006. Resistance lines up at 0.8066, the 23.6% Fib. A break above that aims for 0.8095 and 0.8164. Alternatively, a reversal below support exposes the 0.7950-57 area marked by the May 16 low and the 50% retracement.
Daily Chart - Created Using FXCM Marketscope 2.0
US DOLLAR INDEX
Prices remain wedged between resistance-turned-support at the upper boundary of a falling channel set from the June 1 high (9892) the 38.2% Fibonacci retracement at 9963. A break higher exposes the 50% Fib at 10032. Alternatively, a drop below support targets rising trend line support at 9862.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com
To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak
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