Technical Analysis

Talking Points

• USD/JPY rebounds off key Gann level
• USD/CAD has important cycle turn window later this week
• Euro testing key resistance zone

Price & Time Analysis: USD/JPY

• USD/JPY found support today at the 4th square root relationship of the year-to-date high near 101.35
• Our near-term trend bias is positive in the exchange rate while 101.35 holds
• The 2nd square root relationship of the year’s low at 102.75 remains important resistance that needs to be breached soon if a more important move higher is to take hold
• A cycle turn window is seen around the middle of the week
• A daily close below 101.35 would turn us negative again on USD/JPY

USD/JPY Strategy: Like being square for the time being, but may look to buy a break of 102.75.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
USD/JPY	101.35	101.70	101.90	102.55	*102.75

Price & Time Analysis: USD/CAD

• USD/CAD has come under steady pressure over the past few weeks since failing just below the 50% retracement of the 2009/2011 decline at 1.1235
• Our near-term trend bias is lower in Funds while below 1.1120
• Interim support is seen at 1.0950 ahead of then next major downside attraction at 1.0905
• An important cycle turn window is seen at the end of this week/early next week
• A daily close over the 1st square root relationship of the year’s high at 1.1120 would turn us positive on USD/CAD

USD/CAD Strategy: Shorts favored while below 1.1120, but the clock looks to be ticking for the decline.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
USD/CAD	*1.0905	1.0950	1.0960	1.1055	*1.1120

Focus Chart of the Day: EUR/USD



The price action around bank holidays in the US or the UK is usually written off by FX analysts as inconsequential due to the “lack of volume” associated with these events. We have never really subscribed to this thinking as P&L will reflect moves (and the subsequent psychological knock on effects) the same whether there was high turnover or not. Our interest actually tends to perk up around these periods as we have noticed countless episodes over the years where bank holidays actually produced meaningful reversals if not full on changes in trend. Heading into today’s President’s Day holiday in the US our attention is on EUR/USD and USD/CHF as both are at points in their respective cycles where a change in direction looks quite possible. They are also both nearing key levels of resistance and support at 1.3735 and .8875. If at least a short-term turn is to materialize then we would expect it to do so over the next day or so from around these key levels. Continued European currency strength into late in the day on Tuesday would signal our cyclical view was off.

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Talking Points:

• US Dollar Trying to Rise After First Positive Close in Feb
• S&P 500 Still Treading Water Below 2013 Yearly High
• Crude Oil Tops Dec’13 High, Gold Recoils at Trend Line

US DOLLAR TECHNICAL ANALYSIS – Prices are edging higher after putting a Hammer candlestick. Initial resistance is at 10576, the 23.6% Fibonacci retracement, with a break above that exposing the 38.2% level at 10610. Near-term support is at 10520, the February 17 swing low.



S&P 500 TECHNICAL ANALYSIS – Prices are in the midst of the longest string of consecutive daily gains in seven months. Buyers are testing resistance in the 1840.20-47.90 area, marked by the 50% Fibonacci expansion and the index’s 2013 closing high. Breaking above this boundary initially targets the 61.8% level at 1864.30. Alternatively, a reversal below support in the 1805.70-20.60 area aims for a horizontal pivot level at 1773.40.



GOLD TECHNICAL ANALYSIS – Prices are recoiling from trend line resistance set from April 2013. A break below initial support at 1295.85, the 23.6% Fibonacci retracement, exposes the 38.2% level at 1273.49. Trend line resistance is currently at 1328.07.




CRUDE OIL TECHNICAL ANALYSIS – Prices narrowly edged above resistance at 100.73, the December 27 high, exposing the February 12 top at 101.36 and the 76.4% Fibonacci expansion at 101.86. A break above the latter level exposes the 100% level at 103.59. Alternatively, move back below 100.73 sees initial support at 99.88, the 14.6% Fib retracement.



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

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Daily




-The reversal from above the December high gave way to several days of congestion. Crude is nearing a possible reaction zone defined by lows from September and the October high from 103.49 to 104.35.
-Long term, the failed break of long term trendline supports may very well propel the market higher in the coming months.

LEVELS: 99.38 100.15 101.36 | 103.49 104.35 105.51

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• EURUSD trades around important level
• GBPUSD key reversal
• NZDUSD outside week

EUR/USD
Weekly




-EURUSD remains capped by the trendline that connects the 2008 and 2011 highs (exceeding that level could trigger a breakout-first resistance would be 1.4250-1.4310). The underside of the line that extends off of the September and November lows is being tested as resistance now.
-The rally from the February low consists of 2 equal legs (2 equal legs would be exact at 1.3768…high right now is 1.3772). Right now, the market is trading around the important 1.3744 level. 1.3744 is the 12/27 close (high so far for the move). Former highs at 1.3811 to 1.3831 and the line that extends off of the 2008, 2011 and December highs remain of interest as a reversal zone if reached. Below 1.3636 would suggest that the market has topped.
-The late December failure does raise the possibility of a double top with the October and December highs. The pattern would trigger below 1.3294 and yield a 1.2757 objective. This level is in in line with the 2013 low.

GBP/USD
Weekly




-GBPUSD found support 2 weeks ago from former resistance levels; specifically the October high and top side of the line that extends off of the 2009 and 2011 highs. The rally from the level signals a significant breakout. That doesn’t mean that the breakout can’t fail of course.
-GBPUSD traded to the highest level since November 2009 but did form a weekly key reversal. The development could be the earliest warning that the breakout will fail.

AUD/USD
Weekly




-The next major target in AUDUSD is .7937. This target is determined by the .8847-.9757 range (.8847 – (.9757-.8847). Interestingly, the 50% retracement of the decline from the 2001 low registers at .7927. ‘Chartwise’, the 2010 low is at .8067.
-The largest advance since the October top is underway. The advance is impulsive (5 waves). The implications are for a pullback into .8820/30 before another rally attempt towards .9166-.9267. The trendline that extends off of the April and October highs crosses .9166 in mid-March.

NZD/USD
Weekly




-NZDUSD reversed from a trendline confluence defined by the line that extends off of the October and January highs as well as the underside of the line that extends off of the August and November lows.
-The rate formed an outside week (higher high and higher low). Such a reaction can denote an important event (a top in this case). The outside week is also useful as a point of reference.

USD/JPY
Weekly




-USDJPY finishes the week right below the trendline that connects the lows from November 2012 and October 2013 (again). The bearish engulfing pattern seen last week is negated by a bullish engulfing pattern this week. As such, view the February low as important to the near term bull case.
-102.85/93 is a level that may provoke a reaction (pullback). This level is defined by the 1/13 low, 1/30 and 1/31 highs.
-Longer term, there is an Elliott case to be made for a return to the 4thwave of one less degree. The range spans 93.78 to 96.55.

USD/CAD
Weekly




-Measured objectives from the breakout above the 2011 high range from 1.1680 to 1.1910. The Jul 2009 high rests in this zone at 1.1724 and the 2007 high is near the top of the zone at 1.1875.
-From an Elliott perspective, it’s possible that the rally from the 2012 low composes a ‘3rd of a 3rd (or C)’ wave from the 2007 low.
-The close above the line that extends off of the 2002 and 2009 highs as well as the close above corrective channel resistance add credence to the 3rd of a 3rd wave position.
-USDCAD has reacted at support.

USD/CHF
Weekly




-The USDCHF may have completed a corrective decline from the 2012 high in late December. The decline is in 3 waves, channels in a corrective manner (connect the origin of waves A and C and project a parallel from the terminus of wave A to project the terminus of wave C), and consists of 2 equal waves (would be exactly equal at .8888…the lowest weekly close was actually .8885).
-The market must stay above the December low in order to maintain a constructive longer term bias. Failure to hold could result in a drop towards .8566. USDCHF needs to overcome .8940 in order to flip the near term picture. .8830 is the last level before the low could produce a low.


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Talking Points

• USD/JPY testing key resistance zone
• GOLD backs off from important Fibonacci area
• EUR/USD nearing important turn window

Price & Time Analysis: USD/JPY

• USD/JPY remains in consolidation mode above the 4th square root relationship of the year’s high near 101.35
• Our near-term trend bias is higher while above 101.35
• The 2nd square root relationship of the year’s low at 102.75 is a major hurdle that needs to be overcome soon on a closing basis if a more important advance is to take hold
• The middle of the week is a cycle turn window
• A daily close below 101.35 would turn us negative on the exchange rate

USD/JPY Strategy: Square for the moment. Awaiting a break of 102.75.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
USD/JPY	*101.35	101.70	102.40	*102.75	103.10

Price & Time Analysis: GOLD

• XAU/USD has stalled its advance since encountering resistance last week at a confluence of Fibonacci levels between 1336 and 1341
• Our near-term trend bias is positive in Gold while above 1306
• The 1341 level is an important near-term pivot with traction above needed to signal a resumption of the broader uptrend
• A very minor cycle turn window is seen today
• Weakness below the 50% retracement of the August to December decline at 1306 would turn us negative on the metal

XAU/USD Strategy: Like the long side while above 1306.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
XAU/USD	1286	*1306	1331	*1341	1356

Focus Chart of the Day: EUR/USD


We had a good call in USD/CAD last week as the rate reversed sharply higher from the cycle turn window we had been closely watching mid-week. EUR/USD, on the other hand, has been a different story. The turn we were looking for early last week failed to produce any change and the rate has been threatening resistance at the 1st square root relationship of the 2013 high at 1.3775 ever since. The choppy nature of trading in the Euro since the start of the year is making short-term cycle analysis challenging to say the least. With the rate in its 4th week of an advance, our best guess for the next important turn window is around the middle of this week. A turn lower in the Euro here would signal the 2013 high is still influencing and would potentially set the stage for a broader resumption lower. Continued strength after Thursday above 1.3800 and all bets are off.

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

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Talking Points

• USD/JPY holding under key resistance
• USD/CAD consolidates gains
• USD/CHF enters important short-term turn window

Foreign Exchange Price & Time at a Glance:
Price & Time Analysis: USD/JPY

• USD/JPY remains in consolidation mode below the 2nd square root relationship of the year-to-date low at 102.75
• Our near-term trend bias is higher in USD/JPY while above 101.35
• A clear move through 102.75 is needed to trigger a more important advance in the exchange rate
• An cycle turn window of some importance is seen over the next day or so
• A daily close below the 4th square root relationship of the year’s high at 101.35 would turn us negative

USD/JPY Strategy: Square for the moment. Need to see the rate settle over 102.75 before committing to long positions.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
USD/JPY	*101.35	102.00	102.30	*102.75	103.15

Price & Time Analysis: USD/CAD

• USD/CAD reversed sharply higher last week from the 1.0905 3rd square root relationship of year’s high
• Our near-term trend bias is positive in Funds while above 1.0905
• The rate has so far encountered resistance at the 88.6% retracement of the Jan/Feb range at 1.1185 and a move through this level is needed signal a resumption of the broader move higher
• A very minor cycle turn is seen on Thursday
• Weakness below 1.0905 would turn us negative on Funds

USD/CAD Strategy: Like the long side while over 1.0905.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
USD/CAD	*1.0905	1.1000	1.1085	1.1120	*1.1185

Focus Chart of the Day: USD/CHF



As we made mention on Monday, the next 24-36 hours or so look important for the Euro from a short-term cyclical perspective. This logic extends to USD/CHF as well as the exchange rate has some interesting Fibonacci time relationships of its own converging over the next day or so. A reversal of some kind looks possible during this time especially if the rate can continue to hold above key support near .8850 (2013 closing low). A settle over .8900 would be further evidence of at least a near-term bottom.

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

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Talking Points

• USD/JPY setting for an important move
• NZD/USD entering into important cycle turn window
• Watching the weekly in AUD/USD

Foreign Exchange Price & Time at a Glance:
Price & Time Analysis: USD/JPY

• USD/JPY remains in consolidation mode below the 2nd square root relationship of the year’s low at 102.75
• Our near-term trend bias is higher in the exchange rate while above 101.35
• A daily close over 102.75 is needed to set off a more important advance
• A minor cycle turn window is seen early next week
• A daily close below 101.35 will turn us negative on USD/JPY

USD/JPY Strategy: Square in this range. Break of 102.75 or 101.35 will force us in.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
USD/JPY	*101.35	101.70	101.90	102.35	*102.75

Price & Time Analysis: NZD/USD

• NZD/USD probed above the 4th square root relationship of the year’s low at .8405 today to trade at its highest level since mid-January
• Our near-term trend bias is positive on the Bird while above .8360
• The year’s high and the 78.6% retracement of the Oct/Feb decline between .8430/40 is important resistance
• An important cycle turn window is seen over the next few days
• A daily close under .8360 will turn us negative on the Kiwi

NZD/USD Strategy: Like the long side while over .8360, but positions should be reduced into this turn window.

Will look to cover and go short on a move through .8360.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
NZD/USD	.8320	*.8360	.8400	.8405	*.8440

Focus Chart of the Day: AUD/USD



Two key “Pi cycle” relationships related to the 2011 high and 2001 low in AUD/USD converged this week. We have purposely neglected to mention them until now because we are unsure what they mean for the exchange rate and were hoping to get more clarity by observing the daily price action. It still remains unclear. We do suspect that following such a clear convergence of major cyclical relationships that this time period will ultimately prove to be a very important inflection point for the Aussie. However, we now have to defer to the weekly charts for directional clarity. This week’s low of .8900 and last week’s high of .9080 are key pivots. A clear break of this week’s low will confirm that an important top is in place and set the stage for a resumption of the broader decline. Conversely, a move back through .9080 would confirm that a low of importance has been recorded in AUD/USD. A Pi cycle relationship related to the 2011 high in NZD/USD hits early next week. Perhaps the Aussie is waiting for its Antipodean cousin to show the way?

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

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• EURUSD pressing major market level
• AUDUSD weakest of the bunch
• USDCHF trades to lowest since October 2011

EUR/USD
Weekly




-EURUSD is at the trendline that connects the 2008 and 2011 highs. Exceeding this level could trigger a significant breakout. Initial resistance would be 1.4250-1.4310. Remember, 1.3745 was previously important as resistance so this level may now serve as support.
-The presence of the trendline along with former highs at 1.3811 to 1.3831 is still resistance (now). Below 1.3642 is needed to suggest that the market has topped.

GBP/USD
Weekly




-GBPUSD found support 3 weeks ago from former resistance levels; specifically the October high and top side of the line that extends off of the 2009 and 2011 highs. The rally from the level signals a significant breakout. That doesn’t mean that the breakout can’t fail of course.
-GBPUSD traded to the highest level since November 2009 but did form a weekly key reversal. The development could be the earliest warning that the breakout will fail.

AUD/USD
Weekly




-The next major target in AUDUSD is .7937. This target is determined by the .8847-.9757 range (.8847 – (.9757-.8847). Interestingly, the 50% retracement of the decline from the 2001 low registers at .7927. ‘Chartwise’, the 2010 low is at .8067.
-The largest advance since the October top is underway. The advance is impulsive (5 waves). The implications are for a pullback into .8820/30 before another rally attempt towards .9166-.9267. The trendline that extends off of the April and October highs crosses .9166 in mid-March.

NZD/USD
Weekly




-NZDUSD is testing the line that extends off of the October and January highs. The next possible resistance area is the line that extends off of the April and October 2013 highs. This line is near .8450 next week. Exceeding that level opens up .8543 and .8584.
-Last week’s outside week (higher high and higher low) is negated. Weakness below .8242 is needed to suggest that the path is lower towards .8050.

USD/JPY
Weekly



-USDJPY finishes the week right below the trendline (again) that connects the lows from November 2012 and October 2013 (again). The February low remains critical to the near term bull case.
-102.85/93 needs to give way in order to open up 103.44/90 (viewed as strong resistance).
-Longer term, there is an Elliott case to be made for a return to the 4thwave of one less degree. The range spans 93.78 to 96.55.

USD/CAD
Weekly



-Measured objectives from the breakout above the 2011 high range from 1.1680 to 1.1910. The Jul 2009 high rests in this zone at 1.1724 and the 2007 high is near the top of the zone at 1.1875.
-From an Elliott perspective, it’s possible that the rally from the 2012 low composes a ‘3rd of a 3rd (or C)’ wave from the 2007 low.
-The close above the line that extends off of the 2002 and 2009 highs as well as the close above corrective channel resistance add credence to the 3rd of a 3rd wave position.
-USDCAD has reacted at support.

USD/CHF
Weekly




-USDCHF has broken to its lowest level since October 2011. A massive head and shoulders top is completed (again) after a false break in October, and neckline retest in January. There is no chart support until .8566 (October 2011 low) and the head and shoulders target is .8071.
-Use this week’s high as a pivot. In other words, price needs to exceed .8929 in order to negate downside bearish implications from the break.


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Talking Points:

• US Dollar Continues to Cling to 17-Month Trend Support
• S&P 500 Recoils Downward After Setting New Record High
• Crude Oil Hits 5-Month High, Gold at Familiar Resistance

US DOLLAR TECHNICAL ANALYSIS – Prices continue to consolidate above support at a rising trend line set from September 2012. A break above resistance at 10614, the 23.6% Fibonacci expansion, initially exposes the 38.2% level at 10673. Trend line support is now at 10554, with a reversal below that eyeing the February 17 low at 10520.



S&P 500 TECHNICAL ANALYSIS – Prices are testing below resistance-turned-support at 1851.40, the 2013 high, after recoiling from resistance at 1863.60 marked by the 23.6% Fibonacci expansion. A break below rising channel support at 1840.90 targets an upward-sloping trend line set 1814.40. Alternatively a reversal above 1863.60 aims for the intersection of the 38.2% level and the channel top at 1881.30.



GOLD TECHNICAL ANALYSIS – Prices put in a bearish Evening Star candlestick pattern below resistance at a falling trend line set from April 2013, hinting at a turn lower ahead. Negative RSI divergence bolsters the case for a downside scenario. A break below support at 1306.00, the 23.6% Fibonacci retracement, exposes the 38.2% level at 1281.71. Trend line resistance is now at 1343.92, with a push above that targeting the 23.6% Fib expansion at 1358.83.



CRUDE OIL TECHNICAL ANALYSIS – Prices testing above resistance at 103.89, the 23.6% Fibonacci expansion. Confirmation of a break on a daily closing basis exposes the 38.2% level at 105.67. Support is seen at a rising trend line set from mid-January, now at 102.11, with a reversal below that targeting the December 27 high at 100.73.



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

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Talking Points

• EUR/USD trades at highest level of the year
• GOLD touches highest level in 4- months
• Kiwi reverses during cycle turn window

Foreign Exchange Price & Time at a Glance:
Price & Time Analysis: EUR/USD

• EUR/USD moved sharply higher on Friday to trade at its highest level since late December, but was unable to close above the 78.6% retracement of the Dec/Jan range near 1.3800
• Our near-term trend bias is higher while over 1.3655
• The 1.3800 level is an important near-term pivot with strength above needed to confirm a resumption of the broader advance
• The middle of the week is a minor cycle turn window
• A daily close below the 2nd square root relationship of the 2013 high will turn us negative on the Euro

EUR/USD Strategy: Stopped out of short positions. Square here.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
EUR/USD	*1.3655	1.3735	1.3760	*1.3800	1.3890

Price & Time Analysis: GOLD

• XAU/USD punched through Fibonacci resistance at 1341 today to trade at its highest level in over four months
• Our near-term trend bias is positive in Gold while above 1306
• The 5th square root relationship of the 2013 low at 1349 is important near-term resistance
• A minor Gann cycle turn window is seen around the middle of the week, but the middle of the month looks extremely important for the metal from a timing perspective
• Weakness below the 50% retracement of the August to December decline at 1306 would turn us negative on the metal

XAU/USD Strategy: Like the long side while over 1306.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
XAU/USD	*1306	1320	1349	*1349	1361

Focus Chart of the Day: NZD/USD



NZD/USD traded at its highest level in six weeks on Friday before reversing sharply from just above the 4th square root relationship of the year-to-date low. With an important cycle turn window related to the 2011 high in the exchange rate hitting right here we have good reason to believe that Friday’s price action marks some sort of cyclical peak. A daily close below Friday’s low at .8358 will further confirm this notion and set the stage for a deeper decline in the days ahead. Only unexpected aggressive strength back through .8425 would completely undermine this negative cyclical view.

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

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