Technical Analysis

-USDCAD made a key reversal on a larger than average range last Thursday (9/19). 9/20 follow through confirms the tradeable low.
-More important, the reversal occurs at a huge support level defined by the line that extends off of the September 2012 and January 2013 lows as well as the 100% extension of the decline from the July high (2 equal legs) AND corrective channel support.
-The reversal occurred on heavy volume (20 day high in CME volume).
Trading Strategy: Order to go long at 1.0267 is still valid (was missed by less than 2 pips on Tuesday).
LEVELS: 1.0232 1.0264 1.0300 | 1.0355 1.0409 1.0470


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Talking Points

• Prices are consolidating near resistance at 1.3534 (61.8% Fib)
• Near-term support is in the 1.3416-52 area (June 19 high, 50% Fib)
• Break lower exposes 1.3370 (38.2% Fib); turn above resistance eyes 1.3636 (76.4% Fib)

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

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• USDJPY enters breakout window on Monday
• USDOLLAR observations similar to September 2012
• Euro cross rates are set up for long term bullish resumption

USD/JPY
Daily




-USDJPY ends the week on the lows and below the trendline that originated from the August low. Weakness below 97.75, the 9/18 low and trendline that originates from the June low, would indicate bearish resolution from the 3 month triangle (from June). Holding above 97.75 and trading through 100.60 would indicate bullish resolution.
-The most reliable breakout candidates occur no sooner than 2/3rds and no later than 3/4ths of the way through the triangle. This window is Sep 30th to Oct 11th. The window begins on Monday.
-If price breaks down early next week, beware of support from the 8/28 low and 61.8% retracement of the advance from the June low at 96.70/80.
Trading Strategy: Am still long from 98.80 with a 97.75 stop.

USDOLLAR
Weekly




-Since the 2011 low, USDOLLAR has not dropped for more than 4 consecutive weeks. Price has dropped for 4 weeks.
-Last week’s decline after the Fed announced ‘no taper’ feels, looks, and smells like the QE3 announcement in September 2012. In both instances, daily RSI(21) dropped to nearly the exact same level and price formed an inside week the next week. Both declines even formed channels, albeit in different ways.

EUR/GBP
Weekly




-EURGBP rallied in an impulsive manner from the July 2012 low after declining in a corrective manner for 3 and a half years.
-The rally from 7/23/12 to 2/25/13 took 155 trading days. 155 trading days from 2/25/13 is on Monday. In other words, the current sideways trend will equal the previous bull trend in time on Monday.
-Price has formed a slightly downward sloping parallel (and corrective) channel since the February high. Price has traded ‘around’ the line that extends off of the 2008 and 2011 highs. The multiple false breakouts may help inspire a real breakout.
Trading Strategy: Looking for a low on Monday or Tuesday.

EUR/NZD
Daily




-An ending diagonal (wedge) formed from the March 2011 high to the August 2012 low. Diagonals are often fully retraced, therefore the objective is the origin of the diagonal at 1.9564.
-An inverse head(s) and shoulders may be forming since February 2012. The pattern is slightly upward sloping, making it especially (potentially) powerful (see a completed version on EURAUD below). Exceeding 1.7274 would complete the pattern. Incidentally, the measured objective would be just pips from the origin of the mentioned diagonal.
-Price has retraced slightly over half of the advance from the April low, finding low on Sep 19th. The decline into the 19th may actually complete a flat correction from the June high (a-b-c).

Trading Strategy: Looking for a low between 1.6150 and 1.6220 next week.

EUR/AUD
Daily




-EURAUD is a bit ahead of EURNZD, having completed an inverse head and shoulders pattern on the May breakout. Price exceeded the measured objective before pulling back from above 1.5000 to below 1.4200 and finding low on the Sep 18th.
-The average plotted is 63 days (roughly 3 months). When price broke down from consolidation in 2009, price spikes above this average indicated opportunities to align with the downtrend. Price has sharply rebounded after spiking below the same average, perhaps indicating an opportunity to align with the larger uptrend.
Trading Strategy: Looking for 1.4460/80 support in order to get long against 1.4380.

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

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• Euro COT index is the highest since May 2011
• British Pound net speculative position flips to long
• Mexican Peso traders getting whipsawed

Latest CFTC Release dated September 24, 2013:

The COT Index is the difference between net speculative positioning and net commercial positioning measured. A light blue colored bar indicates that the difference in positioning is the greatest it has been in 52 weeks (bullish) with speculators selling and commercials buying. A light red colored bar indicates that the difference in positioning is the greatest it has been in 52 weeks (bearish) with speculators buying and commercials selling. Crosses above and below 0 are in bold. Non commercials tend to be on the wrong side at the turn and commercials the correct side.




Euro



British Pound



Australian Dollar



Mexican Peso



Gold



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



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Talking Points

• US Dollar Selling May Continue After a Breach of Fib Support
• S&P 500 Hits 3-Week Low After Clearing the 1700.00 Figure
• Gold Stuck in a Narrow Range and Waiting for Direction Cues

US DOLLAR TECHNICAL ANALYSIS – Prices narrowly edged below support at 10530, the 14.6% Fibonacci expansion, hinting sellers are now poised to challenge the 23.6% threshold at 10500. A narrow break of a minor Fib level does not speak to strong directional conviction however. With that in mind, a rebound from here sees the first major layer of resistance at rising trend line set from early April, now at 10591.


Daily


S&P 500 TECHNICAL ANALYSIS – Prices are moving lower as expected, with sellers now testing 50% Fibonacci retracement support at 1680.30. A break below that targets the 61.8% level at 1667.70. Near-term resistance is at 1693.00, the 38.2% Fib, with a turn above that eyeing the 1700.00 figure and the 23.6% retracement at 1708.70.


Daily


GOLD TECHNICAL ANALYSIS – Prices are consolidating below resistance at 1341.60, the 23.6% Fibonacci expansion. This barrier is reinforced by a falling trend line set from the late-August swing top, now at 1346.52. A break above the latter threshold initially targets the September 19 high at 1375.13. Near-term support is at 1320.86, the 38.2% level, with a move beneath that eyeing the 50% Fib at 1304.10.


Daily


CRUDE OIL TECHNICAL ANALYSIS– Prices are testing support at 102.05, the 38.2% Fibonacci retracement. A break downward on a daily closing basis targets the 100.00 figure, followed by the 50% Fib at 98.91.Initial rising channel support-turned-resistance is at 105.33, with a break above that eyeing the underside of a upward sloping trend line set from mid-April (now at 106.43).




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

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- British Pound gains are most extreme since major 2012 top
- Forex trading crowds have sold very aggressively into strength
- We’re watching for shift in sentiment for ‘tradable top’ in GBPUSD

The British Pound trades to fresh 9-month highs versus the US Dollar, but these key signs suggest that GBPUSD gains are unsustainable. Instead of selling into such strength however, we’ll watch for these factors for major signs of turnaround.

British Pound is now 5% Above its 200-day Simple Moving Average




The British Pound now trades 5 percent above its 200-day Simple Moving Average, a level which has coincided with significant turning points in 2010 and 2011.

The month of September likewise saw the single-largest GBPUSD gain since July, 2010, while the weekly RSI recently hit its highest levels since November, 2007.

Gains are clearly overextended and the current pace of British Pound appreciation is unsustainable. Does that mean we see a sharp turn lower? We look to what traders are doing for clues on the next move in GBPUSD.

Forex Trader Sentiment the most Short GBPUSD since Major 2012 Peak




Our Speculative Sentiment Index data shows that retail traders are currently their most short GBPUSD since the pair traded into a significant top in April/May, 2012. We most often go against what most traders are doing; if everyone’s short, we like to buy.

Yet extraordinarily one-sided positions often coincide with major turning points. Does that mean we would like to sell into current gains? Not quite. The problem is simple: THE price and sentiment extreme is only clear in hindsight.

The chart above should emphasize said fact; GBPUSD short positions set fresh records in 2012 and by a very wide margin.

What might signal the turn? We’ll wait for a similar shift in sentiment.

Our purely SSI-based Momentum2 trading strategy looks to trade major shifts in positions. Traders might be short, but if crowds suddenly shift towards buying the Momentum2 strategy would sell GBPUSD. Past performance is not indicative of future results, but the system has done quite well trading the GBPUSD as it continues to hit fresh peaks.

The sticking point is simple: the GBPUSD is clearly overextended and a short position is attractive by many measures, but it seems irresponsible to sell into runaway gains.

Thus we’ll first look for a substantial shift in retail forex crowd positioning as early warning sign of a GBPUSD reversal. The Momentum2 strategy would act as that signal, and we’ll watch whether it goes short through near-term trading.

--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com

Talking Points

• US Dollar Selloff Meets Interim Support at September Swing Low
• S&P 500 Rebounds from Fibonacci Level to Retest 1700.00 Mark
• Gold Selling Resumes in Earnest as Prices Clear $1300/oz Figure

US DOLLAR TECHNICAL ANALYSIS – Prices continued lower as expected after clearing support at 10530, the 14.6% Fibonacci expansion. Sellers are now testing the 23.6% level at 10500, with a further push beneath that eyeing the June 13 low at 10469. Alternatively, a reversal back above 10530 targets support-turned-resistance at a rising trend line set from early April, now at 10594.




The Dow Jones FXCM US Dollar Index and the Mirror Trader USD basket are not the same product.
S&P 500 TECHNICAL ANALYSIS – Prices moved lower as expected, completing a bearish Evening Star candlestick pattern. A rebound from support at 1680.30, the 38.2% Fibonacci retracement, sees initial resistance at 1699.00 (23.6% Fib expansion). A break above that targets 1714.40, the 38.2% level. Alternatively, a move through support eyes 1667.70, marked by the 61.8% retracement and a rising trend line set from November 2012.




GOLD TECHNICAL ANALYSIS – Prices recoiled from sharply lower from resistance in the 1341.60-50.07 area, marked by the 23.6% Fibonacci expansion and a falling trend line set from late August. Sellers are now testing the 61.8% level at 1287.33, with a break below that targeting the 76.4% Fib at 1266.59. Near-term resistance is at 1304.10, the 50% expansion.




CRUDE OIL TECHNICAL ANALYSIS– Prices slipped below support at 102.05, the 38.2% Fibonacci retracement. Sellers now aim to challenge the 100.00 figure and the 50% Fib at 98.91.The 102.05 mark has been recast as near-term resistance, with a move back above that eyeing the bottom of a recently broken rising channel (now at 105.37).




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

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Talking Points

• Prices declined as expected after showing a bearish Dark Cloud Cover candle pattern
• Sellers are testing support at 0.8993 (76.4% Fib); a break lower exposes 0.8850 (100% Fib)
• Near-term resistance is at 0.9081 (61.8% Fib); above that targets 0.9152 (50% Fib)

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

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Talking Points

• US Dollar Drops for Fourth Day, Issues Lowest Close in Two Weeks
• S&P 500 Edging to Key Trend Line Support Set from November 2012
• Gold Recovers Above $1300/oz Figure But Overall Setup Still Bearish

US DOLLAR TECHNICAL ANALYSIS – Prices broke support at 10500, the 23.6% Fibonacci expansion, exposing the June 13 low at 10469. This barrier is reinforced by the 38.2% Fib at 10450, with a push beneath the latter threshold eyeing the 50% retracement at 10410. The 10500 mark has been recast as near-term resistance, followed by the 14.6% level at 10530.





The Dow Jones FXCM US Dollar Index and the Mirror Trader USD basket are not the same product.
S&P 500 TECHNICAL ANALYSIS – Prices moved lower as expected, completing a bearish Evening Star candlestick pattern. Sellers are now testing support at 1680.30, the 38.2% Fibonacci retracement. A break below that targets 1667.70, a level marked by the 61.8% retracement and a rising trend line set from November 2012. Near-term resistance is at 1699.00, the 23.6% Fib expansion.





GOLD TECHNICAL ANALYSIS – Prices rebounded from horizontal support at 1275.51 to retest a recently broken upward-sloping barrier at 1325.79. A break above that eyes 1337.32, the intersection of a falling trend line set from the August high and the 38.2% Fibonacci retracement.





CRUDE OIL TECHNICAL ANALYSIS– Prices recovered from support at 100.88, a horizontal pivot dating back to April 2012. A narrow break above resistance at 103.68 hints the next stop is a test of 105.31, the intersection of the 38.2% level and the underside of a rising channel set from July. A reversal back below 103.68 aims for 100.88 anew.




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

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More hawkish bias from the RBA last night initiated what looks to be a double-top reversal pattern in GBPAUD, which is overextended to the upside and may now be a prime target for a short trade.
GBPAUD can be a tough pair to trade, as it is prone to very large, very violent moves. In fact, the pair is up by nearly 3,000 pips since April alone! Right now, though, the chart for GBPAUD looks to be setting up a very nice reversal pattern.

This week’s rejection of the 1.74 level following the Reserve Bank of Australia (RBA) rate decision may have created a double-top reversal pattern in GBPAUD, the neckline of which sits at roughly 1.6860. From here, a break of that 1.6860 neckline would open up a move down to about 1.62, where the 200-day exponential moving average (EMA) currently sits.

Right now, the GBPAUD pair is trading in a well-defined range between 1.6860 and 1.74, and brave range traders could try to short the pair here, targeting the bottom of that range.
More conservative range traders could try buying GBPAUD at 1.6860, but my favorite strategy would be to sell a break of the range.

Guest Commentary: Double-Top Reversal Pattern in GBP/AUD



The neutrality of the recent RBA statement is going to clear some upside room for the Australian dollar (AUD), in my opinion, as fears of verbal intervention or another rate cut fade. This Aussie upside offers a great deal of GBPAUD downside, as the pair is overstretched after a significant run higher this year. This potential double top offers a great opportunity for the pair to retrace some of its gains and rest a bit before likely pushing higher to end the year.

By Liam McMahon, Currency Strategist, GlobalFxClub.com



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