Technical Analysis

THE TAKEAWAY: The US Dollar and the S&P 500 continue to decline in tandem, with the stock index down for a third day as the benchmark currency broke key chart support.

US DOLLAR TECHNICAL ANALYSIS – Prices took out support at a rising trend line set from mid-June, with sellers now aiming to challenge the 61.8% Fibonacci expansion at 10702. A break below this barrier exposes the 76.4% level at 10656. Near-term resistance is at 10739, the 50% Fib, followed by the trend line (now at 10751).




S&P 500 TECHNICAL ANALYSIS – Prices pulled back as expected after putting in a Hanging Man candlestick. Near-term support is at 1687.40, the May 22 high, a barrier reinforced by the bottom of a rising channel set from mid-July (1690.80). A break below that targets the 23.6% Fibonacci retracement at 1674.10. Channel resistance is now at 1714.70.




GOLD TECHNICAL ANALYSIS – Prices broke lower as expected after putting in a Bearish Engulfing candlestick pattern below resistance at the top of a rising channel set from late June. Sellers are now challenging the 23.6% Fibonacci expansion at 1274.92, with a break below that exposing the 38.2% level at 1229.97. Near-term resistance is at 1302.62, the 14.6% expansion, followed by the July 24 high at 1347.57.




CRUDE OIL TECHNICAL ANALYSIS– Prices appear to be carving out a double top below the July 19 swing high at 108.89. A break below the 23.6% Fibonacci retracement at 105.06 has exposed the 38.2% level at 102.70, with a further push beneath that eyeing the 50% Fib at 100.79. Alternatively, a move back above 105.06 targets 108.89 anew.




--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

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Lost in the excitement over Aussie volatility is the ongoing selloff in USDJPY, which continues to run without much resistance, effectively calling into question one of this year’s “can’t-miss” forex trades.

The bulk of the action in the forex market today is once again concentrated in the Australian dollar (AUD), which dropped overnight on the back of weaker employment numbers only to recover on Chinese trade balance data that showed imports rising 10.9%.

Australia feeds China's thirst for iron ore and relies on its demand for growth. As such, the volume of iron ore imported by China in July was the largest this year, which is a very good sign for Australia's economic outlook.
Traders should expect the volatility in the AUDUSD and other Aussie-related pairs to continue for the next 24 hours, with Chinese inflation and industrial production numbers scheduled for release along with the Reserve Bank of Australia (RBA) statement on monetary policy.

However, lost in the excitement of the big moves in AUD is the continued selloff in USDJPY. The currency pair has now fallen for the fifth consecutive trading day to reach its lowest level since June 16. Although US weekly jobless claims ticked up slightly from 328K to 333K, the absolute amount of claims is still low and consistent with an overall recovery in the labor market.
While continuing claims also rose to 3.018 million from 2.951 million, the four-week moving average dropped to its lowest level since November 2007. The data provided no help to USDJPY, though, and the pair quickly shrugged off a knee-jerk rally.

Last night, the Bank of Japan (BoJ) left interest rates unchanged. The Bank also nudged up its expectations for inflation, saying that, "it appears to be rising as a whole," but did not officially alter the economic assessment.
Comments from BoJ Governor Haruhiko Kuroda were more upbeat, as he indicated that the downside risks as a whole have moderated to some extent in Europe and China. Kuroda also noted that income and spending conditions have improved.

Japanese purchases of foreign bonds have reached the highest level since August 2010, which should have helped push the pair higher. Unfortunately, the continued slide in the Nikkei and lack of upward momentum in US yields has prevented USDJPY from rallying.

From a technical perspective, there is no major support for USDJPY until the 95 level, and even then, beyond the psychological significance of this level, there is not much standing in the way of a continued decline to the June lows at 94.

Aside from being a swing low, the 94-94.20 level coincides with the 38.2% Fibonacci retracement of the 2007-to-2011 selloff that took the pair from a high of 124.15 to a low of 75.57.

Guest Commentary: How Far Will USD/JPY Fall?



From a fundamental perspective, the reasons for buying USDJPY, including Fed tapering and BoJ easing, remain intact, but at this stage, we would prefer to wait for the currency pair to stabilize and start to turn higher before buying.

By Kathy Lien of BK Asset Management



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THE TAKEAWAY: The US Dollar dropped for a fifth consecutive day, hitting the lowest levels in close to 2 months, while the S&P 500 is stalling near the May swing top.

US DOLLAR TECHNICAL ANALYSIS – Prices continued to push lower after taking out support at a rising trend line set from mid-June, with sellers now challenging the 76.4% Fibonacci expansion at 10656. A break below this barrier exposes the 100% level at 10581. Near-term resistance is at 10702, the 61.8% Fib, followed by the 50% expansion at 10739.




The Dow Jones FXCM US Dollar Index and the Mirror Trader USD basket are not the same product.
S&P 500 TECHNICAL ANALYSIS – Prices pulled back as expected after putting in a Hanging Man candlestick. Near-term support is at 1687.40, the May 22 high, a barrier reinforced by the bottom of a rising channel set from mid-July (1692.30). A break below that targets the 23.6% Fibonacci retracement at 1674.10. Channel resistance is now at 1715.80.



GOLD TECHNICAL ANALYSIS – Gold broke lower as expected after putting in a Bearish Engulfing candlestick pattern below resistance at the top of a rising channel set from late June. Prices have now recovered above support-turned-resistance at 1307.34, the 23.6% Fibonacci retracement, exposing the July 24 high at 1347.57 and the channel bottom at 1358.85. Alternatively, a move back below 1307.34 aims for the 38.2% Fib at 1283.03.




CRUDE OIL TECHNICAL ANALYSIS– Prices appear to be carving out a double top below the July 19 swing high at 108.89. A break below the 23.6% Fibonacci retracement at 105.06 has exposed the 38.2% level at 102.70, with a further push beneath that eyeing the 50% Fib at 100.79. Alternatively, a move back above 105.06 targets 108.89 anew.




--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com


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EUR/USD is nearing a major inflection point in price. USD/JPY broke a key support this week, but has some room before turning longer-term negative. Gold still languishing below 1350.

Weekly Price & Time Analysis: EUR/USD

Charts

EUR/USD overcame a myriad of resistance in the 1.3300 area to trade to its highest levels since mid-June this week

• Our medium-term trend bias remains lower in the Euro, but traction over the 1.3415 2Q13 high on a weekly closing basis will shift higher
• Last week’s high near 1.3340 is interim support, but weakness below the 4th square root progression of the year’s low at 1.3185 is really needed to reinvigorate the downside prospects
• The second half of the month looks like the next turn window of importance for the single currency
• The 1.3415 2Q13 high is very significant from a Gann perspective and a weekly close over this level will alter the broader negative picture in place since June

Tactical EUR/USD Strategy: Short against a weekly close above 1.3415.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
EUR/USD	1.3185	1.3340	1.3370	*1.3415	1.3480

Weekly Price & Time Analysis: USD/JPY

Charts

USD/JPY broke below a key Gann/Fibonacci confluence around 97.60 this week to trade to its lowest level in 7-weeks

• While over the 2Q13 low near .9375 our longer-term trend bias will remain higher in the exchange rate
• The 97.60 area is now resistance and traction over this zone is needed to signal a a broader upside resumption
• The second half of the month now looks like the next cycle turn window of importance
• The 78.6% retracement near 95.50 important support and weakness below is likely to lead to a test of .9375 below which would turn us negative on USD/JPY

Tactical USD/JPY Strategy: Tactical longs still favored against .9375.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
USD/JPY	*93.75	95.50	96.25	97.10	*97.60

Weekly Price & Time Analysis: Gold

Charts

• XAU/USD has come under fairly steady pressure since failing near important Fibonacci symmetry in the 1350 area at the end of July
• While below this level our medium-term trend bias will remain lower in the metal
• The 4th square root progression of the July high near 1272 remains a key downside pivot with sustained weakness below this level needed to set off a more important decline
• An important week long cycle turn window is seen around the end of next week
• Strength over 1348 is needed to alter the negative cyclical picture and turn us positive on the metal.

Tactical Gold Strategy: We like tactical short positions in the metal while under 1348.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
XAU/USD	1250	*1272	1316	*1350	1372

--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com



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The USDOLLAR took a hit this week, trading to its lowest level since 6/19 (FOMC). Aside from the psychological and volume impact that the 6/19 close has on the market, the level is defined by a line that extends off of the December 2012 and June 2013 lows.

USDOLLAR
Daily




The USDOLLAR declined for a 6th consecutive day and continues to trade at the line that extends off of the December 2012 and June 2013 lows. The most recent 6 day decline (consecutive) was over 2 years ago (a 7 day decline ended on 12/31/2010). In other words, we haven’t seen a market like this since the 2011 low. Failure to hold nearby levels opens up a run on the March and April highs at 10577/86 (circled above).

GBPUSD
Weekly




FOREXAnalysis: The recent move doesn’t do anything to change the long term implications from the 4 year triangle break that occurred in February. The line that extends off of the January and June highs is at the market. If price were to trade through the June high (1.5750), then the line that extends off of the 2007 and 2013 highs would come into play near 1.5800. 1.5600 (May top and large volume area from 6/6 close) is a big level and is reinforced by parallel channel resistance over the next several days. Parallel channels have worked well in estimating support resistance at multiple degrees of trend in recent years.
FOREX Trading Strategy: Inside day today at resistance (1.5550-1.5600) is a top warning. A reversal from 1.5600 would be something worth investigating for a position.

GBPUSD
Daily




USDJPY
Daily




FOREXAnalysis: The USDJPY found support at the 6/14-6/18 resistance area this week and formed a small range key reversal on Thursday. 95.35 (78.6% of rally from June low, 61.8% extension of decline from the top when extended from the July top and close of the low day in June) remains a potentially significant support price if reached. If trading USDJPY, it helps to have a sense for Nikkei support/resistance. Nikkei 12700-12850 is an area to watch for near term support.
FOREX Trading Strategy: Will examine the short term picture as it develops next week but looking for a low.

USDZAR
Daily



FOREXAnalysis: “USDZAR has pulled back slowly over the last 6 weeks to test a former upward sloping resistance line. A large range key reversal unfolded on Wednesday after price dipped just under the line. The market response is promising. The daily RSI dip below 40 is characteristic of a market attempting to bottom within a larger bull trend.”
FOREX Trading Strategy: Price spiked below 9.78 today before reversing. A higher low may be in place.

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


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Aussie strength coupled with Loonie weakness has caused the AUDCAD to run far and fast to the upside, but with the charts signaling exhaustion, a near-term short opportunity seems to be at hand.
The Australian dollar (AUD) has continued to strengthen versus the Canadian dollar (CAD), and Friday’s major miss in Canada’s employment change and tick lower in the unemployment rate has propelled the AUDCAD pair even higher.
The dominant trend here is the question: Does the Chinese trade balance and the Reserve Bank of Australia (RBA) omission of “scope for further easing” in the August statement change the trend for the AUD?
On the other side of the pair, how much more will struggling commodities exports and consumer growth weaken the loonie?
That’s the near-term outlook, but it comes in contrast to the third-quarter optimism that, even post-Fed taper, Canadian growth will rebound. So there’s a longer-term outlook that could be the fuel for more downside in this pair.
Guest Commentary: Daily Chart of AUD/CAD

The downtrend in AUDCAD is established, but it’s both Aussie strength and loonie weakness that is creating the correction in the trend. As long as price remains below the 50-period displaced moving average (DMA), I will consider the trend/resistance intact.
The red candles are still dominating, so Friday’s blue (neutral) GRaB candle is not a concern as prices rally into the dynamic resistance of the 34-period exponential moving average (EMA) wave.
The five-minute chart below shows the speed of the 50+ pip move higher, which borders on the extreme of the hourly price movement for the pair. This is a fairly solid indication of an exhaustion point, and in the case of the daily AUDCAD swing short, it puts the move just a little above the conservative short entry at 0.9450.
Guest Commentary: Exhaustion Point for AUD/CAD
By

Raghee Horner of TradeForexFutures.com



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THE TAKEAWAY: The US Dollar has found interim support after six consecutive days of selling while the S&P 500 has slipped back below the May swing top.

US DOLLAR TECHNICAL ANALYSIS – Prices found support at 10656, the 76.4% Fibonacci expansion, after taking out a rising trend line set from mid-June. Near-term resistance is at 10702, the 61.8% Fib, followed by the 50% expansion at 10739. Alternatively, a reversal below support exposes the 100% level at 10581.


Daily


S&P 500 TECHNICAL ANALYSIS – Prices pulled back as expected after putting in a Hanging Man candlestick. Sellers are now testing below support is at 1687.40, the May 22 high, with a break downward targeting the 23.6% Fibonacci retracement at 1674.10. Near-term support-turned-resistance is at the recently broken bottom of a rising channel set from mid-July, now at 1695.00. A move above that exposes the August 8 high at 1709.60.


Daily


GOLD TECHNICAL ANALYSIS – Prices are testing above resistance at a falling trend line set from early May, with buyers aiming at the 38.2% Fibonacci expansion at 1336.76. A break above that targets the 50% level at 1356.52. Near-term resistance is at 1312.32, the 23.6% level, with a reversal back beneath that eying the August 7 low at 1272.81.


Daily


CRUDE OIL TECHNICAL ANALYSIS– Prices are edging lower within the bounds of what may be a Flag chart pattern, a setup indicative of counter-trend consolidation preceding resumption of the larger bullish trend. Near-term resistance is at 106.04, the 23.6% Fibonacci expansion, with a break higher targeting the Flag top (107.14) and the 38.2% level at 108.40. Near-term support is at 102.21, the August 8 low, followed by the Flag bottom at 101.84.


Daily


--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com


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GBP/USD Technical Strategy: Pending Short at 1.5463, Targeting 1.5352
Prices put in a bearish Three Inside Down candlestick pattern below resistance at a falling trend line set from mid-December 2012, hinting a move lower is ahead. Risk/reward considerations require a short entry price no lower than 1.5463 and we will set an order to trigger the trade at that level. If activated, the position will have a stop-loss set off on a daily close above 1.5574 and an initial target at 1.5352, the 23.6% Fibonacci expansion.


Daily


--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com


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EUR/USD continues to meander between key long and short-term pivots while NZD/USD consolidates below important resistance. AUD/USD may have recorded an important cyclical low last week.

Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: EUR/USD

• EUR/USD failed late last week at the 8x1 Gann angle line of the year-to-date high in the 1.3400 area
• While above a Gann confluence near 1.3240 the near-term trend bias will remain higher
• The 1.3400 Gann angle is now a near-term pivot, but a close over 1.3415 looks needed to set off a more important move higher in the Euro
• Near-term cyclical studies are at a minor inflection point over the next 24-hours
• Weakness below 1.3240 on a closing basis will undermine the immediate positive tone in the rate and turn us negative

EUR/USD Strategy: Still square. Looking to position in the next 24 hours once there is a bit more directional clarity.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
EUR/USD	*1.3240	1.3275	1.3295	1.3360	*1.3400

Price & Time Analysis: NZD/USD

• NZD/USD has moved steadily higher since finding support last week at the 10th square root progression of the year’s closing high
• While over .7860 our near-term trend bias will remain higher in the Bird
• The 38% retracement of the year’s range near .8075 is critical resistance and a close over this level is needed to prompt a more meaningful advance
• A minor cyclical turn window is seen around the middle of the week
• Back under .7860 would alter the near-term positive outlook in the exchange rate

NZD/USD Strategy: Like the long side while the Kiwi is over .7860

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
NZD/USD	*0.7860	0.7945	0.7985	0.8035	*0.8075

Price & Time Analysis: EUR/GBP

• EUR/GBP has come under steady downside pressure since failing at the 4th square root progression of the 2Q13 low near .8760 at the start of the month
• While below the 2nd square root progression of the year-to-date high at .8670 our near-term trend bias will remain lower in the cross
• The 3rd square root progression of the year’s high at .8580 looks like critical near-term support with weakness below needed to trigger the next important decline
• Minor cyclical turn windows are seen today and at the end of the week
• A close back above .8670 would alleviate some of the downside pressure and turn us positive on the cross

EUR/GBP Strategy: Like the short side while below .8670.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
EUR/GBP	0.8540	*0.8580	0.8595	0.8625	*0.8670

Focus Chart of the Day: AUD/USD



We have been rather dismissive of the recent low in AUD/USD as a few cyclical techniques continue to point lower in the rate. However, a variety of longer-term Fibonacci time relationships between this month’s low and several key lows over the past 4 years is making us seriously question this negative cyclical assessment. Such a clear relationship amongst so many important lows is rare and raises the possibility that this month’s low could lead to a deeper upside correction (and possibly even a full fledge reversal in trend) in the weeks ahead. The .9300 level looks absolutely critical in this regard with a close over it the likely lynchpin to a much more important move higher. Shorter-term cyclical studies suggest weakness will be seen in the Aussie into the latter part of the week before another low of some kind is recorded. However, a close below .8900 would undermine the potential positive prospects of the Fibonacci time relationship.

--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com


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THE TAKEAWAY: The US Dollar advanced for a second consecutive day to yield its best run higher in two weeks but the move is yet to overturn last week’s bearish breakout.

US DOLLAR TECHNICAL ANALYSIS – Prices advanced as expected after putting in a Bullish Engulfing candlestick pattern. A break above initial resistance is at 10735, the 23.6% Fibonacci retracement, has exposed the 10779-87 area, marked by the underside of a rising trend line set from mid-June and the 38.2% level. A push beyond that aims for the 50% level at 10830. Alternatively, a move back below 10735 eyes the August 8 lowat 10650.




The Dow Jones FXCM US Dollar Index and the Mirror Trader USD basket are not the same product.
S&P 500 TECHNICAL ANALYSIS – Prices pulled back as expected after putting in a Hanging Man candlestick. Sellers are now testing support is at 1687.40, the May 22 high, with a break downward targeting the 23.6% Fibonacci retracement at 1674.10. Near-term support-turned-resistance is at the recently broken bottom of a rising channel set from mid-July, now at 1697.40. A move above that exposes the August 8 high at 1709.60.




GOLD TECHNICAL ANALYSIS – Prices broke resistance at a falling trend line set from early May, exposing the 38.2% Fibonacci expansion at 1336.76. A break above that targets the 50% level at 1356.52. Near-term support is at 1312.32, the 23.6% level, with a reversal back beneath that eying the August 7 low at 1272.81.



CRUDE OIL TECHNICAL ANALYSIS– Prices have been edging lower within the bounds of what may be a Flag chart pattern, a setup indicative of counter-trend correction preceding resumption of the longer-term advance. A push above near-term resistance at 106.04, the 23.6% Fibonacci expansion, has exposed the Flag top at 106.92. A push beyond that targets the 38.2% level at 108.40. Alternatively, a move back below 106.04 aims for the August 8 low at 102.21, followed by the Flag bottom at 101.61.




--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

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