Technical Analysis

Daily

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-EURUSD traded to 1.3645 last week. 1.3640 is the year to date high close (2/1 close). Such an important level may inspire a more important reaction (for example, see GBPUSD from 1.6252).
-Price dropped below 1.3500 and reversed after the release of the Fed minutes on Wednesday. The decline is contained by a corrective channel (3 waves) to this point, which leaves the door open to additional gains (as long as above Wednesday low).

Trading Strategy: Market is stuck between a rock and a hard place. Response at 1.3640 (2/1 close) combined with COT (most long since May 2011) points to formation of a larger top but drop from the top consists of roughly 2 equal waves and channel in a corrective manner. When in doubt stay out.
LEVELS: 1.3415 1.34501.3485 | 1.3570 1.3617 1.3645


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Talking Points

• Cycle turn windows in several commodity currencies
• USD/JPY rebounds off 200-day MA
• SPX closing in on important upside pivot

Focus Chart of the Day: USD/CAD

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The next couple of days look important for several commodity currencies as clear cycle turn windows exist in USD/CAD, NZD/USD and USD/NOK. Our best guess is that these windows will lead to a bout of currency strength (USD weakness) given the trend profiles leading into them. In USD/CAD we will be focusing on Gann and Fibonacci resistance between 1.0410 and 1.0455 as we suspect this area should hold if a topping process is indeed paying out. Complicating matters somewhat is a slew of Canadian data over the next few sessions, but as long as this zone holds on a daily close basis the potential remains for a peak in our view. Weakness under 1.0370 would be seen as initial confirmation of a high.

Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: USD/JPY

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• USD/JPYhas rallied aggressively over the past few days after finding support at the 7th square root progression of the year’s high in the 96.60 area
• While below 98.60, our near-term trend bias remains lower in the rate
• A daily close back under Gann support at 97.55 is needed to re-invigorate downside prospects
• A minor cycle turn window is seen on Monday
• A daily close over the 5th square root progression of the year’s high at 98.60 will turn us positive on the rate

USD/JPY Strategy: Might be worth taking a punt on the short side against 98.60 over the next few days. We will start looking to position long on any daily close over that level.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
USD/JPY	97.20	*97.60	98.25	*98.60	99.05

Price & Time Analysis: GBP/USD

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• GBP/USD has come under increasing pressure over the past few days and closed under the 2nd square root progression of the month-to-date high near 1.6000 on Wedensday
• This technical development has shifted our near-term trend bias to negative in Cable
• A Gann pivot is seen around 1.5895 with a break below exposing downside attractions at 1.5830 and below
• A minor cycle turn window is seen over the next day or so
• It would take strength back above the 1st square root progression of the October high at 1.6135 on a daily closing basis to turn us positive Cable

GBP/USD Strategy: We like selling into strength while the rate is below 1.6135.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
GBP/USD	*1.5840	1.5895	1.5965	1.6020	*1.6135

Price & Time Analysis: S&P 500

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• S&P 500 rebound from the 1652 2nd square root progression of the all time high gathered pace on Thursday
• The 1st square root progression of the all time high come into play at around 1692 and a daily close over this level is needed to shift the near term trend bias back to higher
• Interim support is seen around 1673, but a daily close under 1652 is really needed to provoke something more meaningful on the downside
• A minor cycle turn window is seen around the middle of next week
• A daily close over 1692 will turn us positive on the index

S&P 500 Strategy: Square here, but may look to get long if index can close over 1692.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
S&P 500	*1652	1673	1692	*1692	1710

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

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• Short Term stock market levels to time risk trends
• GBPJPY bigger top in the making?
• Monitor USDMXN for support at slightly lower levels

Dow Jones Industrial Average
Daily

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-After a dip under the August low (the index was actually overlapping with mid-April levels). The DJIA rallied 2.93% in 2 days. This is the largest 2 day rally since 12/31/12-1/2/13.
-Sideways action since May is either a topping formation or consolidation before a fantastic ‘blowoff’ that ultimately ends in tears.
-While in the range however, be aware of the following levels: 15250 and 15382 as near term resistance as well as the line that originates at the November low and 14945 and 14795 as supports.

Trading Strategy: Know these levels in order to time risk trends.

GBP/JPY
Daily

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-The line that originates at the November 2012 low came into play as resistance at the 10/1 high.
-The decline from the 10/1 high is impulsive (5 waves). While the drop may could constitute a flat, it would be silly not to consider the alternative given the reaction at the underside of the mentioned trendline and early month high.
-GBPJPY broke below support (red rectangle on chart) on 10/3. Price has advanced in recent days to challenge the level as resistance. So far, that level is holding.

Trading Strategy: Looking for a high on Monday. Resistance extends to 158.70 (10/1 close).

NZD/JPY
Daily

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-The line that originates from the June 2012 low defines the long term trend but the trend since April is sideways.
-NZDJPY ends the week at a Fibonacci confluence; the 61.8% retracement of the decline from the April high and 61.8% retracement of the decline from Sep 19th-Oct 2nd. Friday’s high is also right at the 9/26 high.
Trading Strategy: Exited longs Friday. This market ends the week at resistance but the near term picture is too uncertain to take a near term view. Support is 81.15/50 and resistance is 82.60-83.05. If the market reaches these levels, then I may take action.

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

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Daily

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-A head and shoulders top is confirmed. The objective is below the June low of 1180 at 1150.
-Possible supports along the way are the August low at 1272 (market has traded around that level the last 2 days), the 6/28 close at 1234, and channel support (downward sloping),
Trading Strategy: Short, risk istightened to 1315. Target is 1150 (basically a test of the lows). I’ll continue to trail stops as market action allows.

LEVELS: 1208 1234 1260 | 1290 1315 1330


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Talking Points
- UK inflation is expected to remain on its downward trajectory.
- A further decline in UK CPI towards +2.5% will keep more QE from the BoE on hold.
- Extent of end of summer growth slowdown to be revealed with ZEW surveys today.

EURO-ZONE ECONOMIC CALENDAR

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Euro-Zone data cooled midyear but European Central Bank policymakers seem convinced that the near-term slowdown is just a natural part of the business cycle. Accordingly, as the ECB holds back on additional policy action, market observers are looking for clear signs of either a recovery that’s continuing or teetering before being sold on the Euro’s recovey.

The ZEW surveys today, particularly out of Germany, will suggest that any summer drag may be diminishing. The Current Situation component of the German ZEW survey is expected to rise to its highest level since June 2012, while the Economic Sentiment (“Expectations”) component will have held at its highest level since April 2010. Signs that the European economy is stabilizing without the additional prodding by policymakers should be considered EUR-bullish.

UK ECONOMIC CALENDAR

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The stated goal of the Bank of England’s forward guidance policy is to keep interest rates low or lower until the Unemployment Rate falls to or below 7.0% over the next few years, unless of course inflation holds above +2.5% annualized through late-2015. Both of these objectives look on track, which is part of the reason why the British Pound has been so resilient since the early-2Q’13.

In line with weak labor wage growth and insulated purchasing power thanks to a stronger Sterling, UK CPI is due to fall back another one-tenth of one percent to +2.6%, the lowest rate in a year. Declining inflation figures typically lead to tighter monetary policy but in the case of the UK where inflation has been running well-above the BoE’s target for the past several years, a continued moderation of price pressures in context of a stable recovery will only further underpin a strong British Pound over the medium-term.

SWISS ECONOMIC CALENDAR

There are no data due for the Swiss Franc on Tuesday, October 15.

--- Written by Christopher Vecchio, Currency Analyst

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Daily

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-AUDUSD has extended gains following the 10/10 outside day. Price exceeded the Sep high of .9528 but failed to close above. Be aware of the 2012 low at .9580 as possible resistance if reached.
-Structure of the advance from the 9/30 low is overlapping. It’s possible that the move is an ending diagonal. The poke above the line that extends off of the 10/1 and 10/8 high may compose a ‘throwover’ that is typical at the end of such moves.

Trading Strategy: Below .9420 would suggest that a top is in place. Until then, one can’t dismiss higher prices.
LEVELS: .9428 .9460 .9484 | .9547 .9580 .9665


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Talking Points

• US Dollar Range-Bound in Familiar Territory Above June Low
• S&P 500 Recovers as Expected, Reclaims Foothold Above 1700
• Gold Technical Positioning Hints at a Possible Rebound Ahead

US DOLLAR TECHNICAL ANALYSIS – Prices edged higher as expected after putting in a bullish Morning Star candlestick pattern above support at 10469, the June swing bottom. Initial resistance is at 10539, the 23.6% Fibonacci retracement, with a break above that targeting the 38.2% level at 10591.

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The Dow Jones FXCM US Dollar Index and the Mirror Trader USD basket are not the same product.
S&P 500 TECHNICAL ANALYSIS – Prices recovered as expected after showing a Spinning Top candlestick at support marked by a rising trend line set from late February. Near-term resistance is now at 1713.30, the 61.8% Fibonacci expansion, with a break above that targeting the 76.4% level at 1729.00. Alternatively, a break below support at 1700.70 – the 50% Fib – exposes the 38.2% expansion at 1688.00

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GOLD TECHNICAL ANALYSIS – Prices put in a bullish Morning Star candlestick pattern, hinting a move higher is ahead. Initial resistance is at 1294.51, the 23.6% Fibonacci retracement. This barrier is reinforced by a falling trend line set from the August swing top. A break above that initially targets the 38.2% level at 1321.09. Near-term support is at 1251.54, the October 15 low.

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CRUDE OIL TECHNICAL ANALYSIS– Prices are wedged between support at 100.88, a horizontal pivot dating back to April 2012, and the underside of a rising channel set from early July (105.17). A break upward aims for the underside of a rising trend line set from mid-April (108.33). Alternatively, a push through support initially targets supports at the 100.00 figure and 98.99.

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

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Daily

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-AUDUSD has extended gains following the 10/10 outside day. Price exceeded the Sep high of .9528 but failed to close above. Be aware of the 2012 low at .9580 as possible resistance if reached.
-Structure of the advance from the 9/30 low is overlapping. It’s possible that the move is an ending diagonal. The poke above the line that extends off of the 10/1 and 10/8 high may compose a ‘throwover’ that is typical at the end of such moves.

Trading Strategy: The market is stretched up here. Weakness below .9420 would suggest that a top is in place.
LEVELS: .9428 .9484 .9519 | .9580 .9665 .9710


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Daily

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-AUDUSD has extended gains following the 10/10 outside day. In fact, today was the 7th consecutive advance. This is the first such instance since 11/5/10.
-The rally from 8/5 consists of 5 distinct waves. A common relationship is equality between waves 1 and 5. In this case, wave 5 (from .9280) would equal wave 1 (.8847-.9232) at .9665. This is also the 6/14 high.

Trading Strategy: The market is stretched up here. Weakness below .9510 would suggest that a top is in place. The mentioned .9665 is a great place for a top.
LEVELS: .9480 .9510 .9594 | .9665 .9710 .9791


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Talking Points

• EUR/USD closing in on a new YTD high
• GBP/USD testing important Gann resistance
• Kiwi stalls at important Fibonacci level

Focus Chart of the Day: EUR/USD

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The successful hold of the 1.3475 Gann support level in EUR/USD on Wednesday has prompted an aggressive move higher over the past couple of days putting the Euro within striking distance of new year-to-date highs. Our best guess from a short-term cycle standpoint is that general strength will persist into the cycle turn window seen around the second half of next week before more legitimate medium-term topping prospects materialize. Respectively, the 9th and 10th square root progression of the year’s low at 1.3770 and 1.3880 will act as natural attractions during this timeframe. Only unexpected aggressive weakness below 1.3595 would warn that the single currency has peaked ahead of schedule. From a longer-term perspective the middle of November remains an important potential turn window for the Euro.

Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: GBP/USD

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• GBP/USD found support Wednesday at the 9th square root progression of the year’s low near 1.5895
• Subsequent strength back over 1.6135 has shifted our near-term trend bias to positive in Cable
• Immediate attention is on the 8x1 Gann angle line of the year’s highs at 1.6225 with a close above needed to prompt the next important push higher in the rate
• A minor turn window is seen early next week
• Only a daily close below Gann support at 1.6085 would undermine the immediate positive tone and focus lower

GBP/USD Strategy: Square here. Looking to buy on weakness.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
GBP/USD	1.6015	*1.6085	1.6185	*1.6225	1.6300

Price & Time Analysis: NZD/USD

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• NZD/USD traded to its highest level since early May on Thursday before encountering resistance at the 78.6% retracement of the year-to-date range in the .8525 area
• Our near-term trend bias remains higher in the Bird while over .8340
• The .8525 level looks like formidable resistance and a clear break above is needed to signal a resumption of the underlying trend
• A minor turn window is seen at the start of next week
• Only a daily close below the 2nd square root progresssion of Thursday’s high at .8340 would turn us negative on the Kiwi

NZD/USD Strategy: Like the long side while over.8340.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
NZD/USD	*0.8340	0.8445	0.9035	*0.8525	0.8540

Price & Time Analysis: S&P 500

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• S&P 500 has moved aggressively higher over the past couple of weeks after finding support at the 2nd square root progression of September high in the 1650 area
• Our near-term trend bias is positive on on the index while over 1710
• The 5th square root progression of the June low at 1743 is the next resistance of note with a move through there exposing Fibonacci attractions at 1758
• The first and latter part of next week are minor turn windows in the index
• Only a close below the 4th square root progression of the June low at 1710 would turn us negative on the S&P 500

S&P 500 Strategy: Like the long side while over 1710.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
S&P 500	*1710	1730	1737	*1743	1758

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

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