Technical Analysis

Talking Points

• EUR/USD nearing important support zone
• Important cycle turn window in Crude
• Defining week for AUD/USD?

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

• EUR/USD remains under pressure since failing at the 38% retracement of the May/June decline earlier in the month near 1.3690
• Our near-term trend bias is negative in the euro while below 1.3690
• A daily close under the 61.8% retracement of the June/July advance is needed to signal a downside resumption
• An important cycle turn window is eyed this week
• A move over 1.3690 will turn us posittive on the euro

EUR/USD Strategy: Square, but euro looks like it might try to turn higher this week.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
EUR/USD	1.3520	1.3575	1.3605	1.3640	1.3690

Price & Time Analysis: CRUDE

• CRUDE has come under steady pressure since failing near the 78.6% retracement of the late 2013 decline in the 107.70 area
• Our near-term trend bias is lower in Crude while below 104.20
• A daily close under the 50% retracement of the April/June advance at 103.20 is needed to set up a new leg lower in the commodity
• A turn window of some importance is eyed over the next couple of days
• A daily close back over 104.20 will turn us positive on Crude

Crude Strategy: Like reducing short positions into this turn window. Will look to go long on a move back through 104.20.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
Crude	102.10	103.40	103.40	104.20	105.10

Focus Chart of the Day: AUD/USD



This week is shaping up to be an important one for the Australian Dollar. In addition to a major cycle turn window that we see in AUD/NZD around the end of the week several cyclical techniques are pointing to a key period in AUD/USD around mid-week. Is the exchange rate setting up for a secondary high or is it about to resume its steady trend higher? The price action over the next 48 hours or so should be very telling. Fibonacci retracements between .9415 and .9435 are potentially important, but the main level we will be focused on is the 8th square root relationship of the year’s low near .9460 which is also the 2Q high. If a secondary high is in the works that would be an ideal spot for it to occur. If the rate can close over .9460 a trend resumption is likely underway. Any weakness under last week’s low would cast serious doubt on the positive scenario.

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

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• EURUSD and USDCHF divergence (again)
• GBPUSD weekly RSI top warning
• USDJPY pattern becoming clearer

EUR/USD
Weekly



-“Long term, a failed breakout and top would keep with the pattern of 3 year cycle tops. 1.3750 is an important reference point (year open).”
-“1.3670/85 is a level that should inspire a reaction (selling). How the market reacts at that level will help in assessing the next move.” EURUSD found top at 1.3700 on July 1st and traded within pips of its February (year to date low) low today. The hullabaloo that surrounded the EURUSD test of the trendline that surrounds the last 2 Julys along with divergence with USDCHF (which did NOT exceed its June high) warns of a rip following this dip. Exceeding 1.3575 would cast doubt on the downtrend that commenced on July 1.

GBP/USD
Weekly



-GBPUSD recently traded at its best level since October 2008. The level is also home to the 2005 low. The next big confluence is from the 1998 high and 50% retracement of the decline from the 2007 high at 1.7330/45.
-Of note is a weekly outside reversal and weekly RSI rolling over from above 70 this week. Prior instances of RSI rolling over (2004, 2006, and 2007) from above 70 indicated tops of at least several months.

AUD/USD
Weekly



-The combination of the .9400 figure and weekly RSI failing near 60 indicates a lot of overhead to punch through. Since the 2011 top, each RSI failure near 60 has led to a top or topping process (range for several weeks then a breakdown...that may be the case now).

NZD/USD
Monthly




-“Don’t forget about the line that extends off of the 1996 and 2007 highs. That line crosses through the 2008, 2011, and highs as well. In 2011 (record free float high), the rate surged through the line in late July before topping on August 1st.” The rate reversed this week from pips below the record high and above the mentioned line.
-Market conditions (volatility) are quite different that they were in 2011 but the record free float high did occur in ‘blow-off’ fashion throughout July (the high was August 1st). If history were to rhyme, then know that the rally from the 2000 low would consist of 2 equal waves at .9203. Below .8400 would suggest that a long term top is in place.

USD/JPY
Weekly



-The miserable trading conditions in USDJPY are probably explained by its long term Elliott wave position. That is, the rate has been mired in a corrective 4th wave all year. The good news is that wave 4 probably ends within a month. A measured target for the end of wave 4 is 99.44 (2 equal legs from the high). This level intersects Elliott channel resistance in 3 weeks (week that ends 8/8).

USD/CAD
Weekly



-“USDCAD has fallen apart which ironically means it is probably going to find some sort of low soon. The rate is nearing important price levels. The 2011 high at 1.0657 and current year open at 1.0634 are possible supports. The line that extends off of the 2012 and September 2013 lows is at about 1.0607 next week. This level is in line with the July 2013 high at 1.0608.”
-USDCAD ended up finding low at 1.0620. However, failure at trendline resistance (see the daily) is reason enough to question whether or not lows are revisited once more before the larger turn higher.

USD/CHF
Weekly



-USDCHF ended up finding low at the close of the weekly low (week that ended 5/9…the close was .8860) 2 weeks ago. As written in the EURUSD section, the risk is lower in the USD given the divergence between USDCHF and EURUSD (USDCHF stayed below its June high while EURUSD dropped below its June low).


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Talking Points

• EUR/USD testing critical support area
• Gold rebounds off Key Fib level
• USD/JPY enters into important two week period

Price & Time Analysis: EUR/USD

• EUR/USD traded at its lowest leve in over 5-months on Friday before rebounding off 1.3500
• Our near-term trend bias is lower in the euro
• Key support levels remain 1.3500 and 1.3460 with weakness below the latter required to signal the start of a more significant decline
• A cycle turn window is eyed later this week
• A move back over 1.3650 is required to relieve immediate downside pressures

EUR/USD Strategy: Like holding reduced short positions while below 1.3560.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
EUR/USD	1.3460	1.3500	1.3515	1.3590	1.3650

Price & Time Analysis: GOLD

• GOLD found support last week at the 50% retracement of the June/July advance
• Our near-term trend bias is higher in the metal while over 1280
• Interim resistance remains near 1321, but a move through 1337 is needed to confirm an upside resumption
• A minor cycle turn window is eyed Tuesday
• A daily close under 1280 will turn us negative on the metal

GOLD Strategy: Like holding long positions against 1280.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
GOLD	1280	1293	1316	1321	1337

Focus Chart of the Day: USD/JPY



The second half of the month looks quite important for USD/JPY. The medium-term cyclical picture suggests the exchange rate will try to forge a low during this time. The first key period is eyed around the middle of this week and then there is another turn window around the end of the month. The real tricky part is determining where a reversal might try to take place. Risk certainly seems to be increasing for a final spike lower given the lack of upside momentum recently vis-à-vis global equities. However, with the exchange rate at the bottom of a well-defined 6-month range in a record low vol environment we can’t say with any certainty that it will break before moving higher. Given this lack of clarity of where a low might occur, we prefer to save the “mental capital” and just focus on a move through 102.25 (and then 102.85) as this would be strong evidence that an important move higher in underway. Until then it is just wait and see.


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Talking Points

• EUR/USD testing key long-term pivot area
• USD/CAD cycle turn window later this week
• USD/JPY rebounds from range lows

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

• USD/JPY is in recovery mode after finding support near the low end of its six month range
• Our near-term trend bias is higher in the rate while above 101.05
• The 102.25 area remains a key upside pivot with traction above needed to usher in a more significant advance
• A cycle turn window is eyed here
• A move back under 101.05 would re-shift focus lower

USD/JPY Strategy: Like going long on a move through 102.25.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
USD/JPY	101.05	101.35	101.50	101.75	102.25

Price & Time Analysis: USD/CAD

• USD/CAD is in consolidation mode near the 38% retracement of the June/July decline in the 1.0750 area
• Our near-term trend bias is higher in Funds while over 1.0630
• Strength through 1.0800 is needed to signal the start of a new leg higher in the rate
• The end of the this week/early next week looks to be the next key cycle turn period for USD/CAD
• A move under 1.0630 will turn us negative on the exchange rate

USD/CAD Strategy: Like the long side while above 1.0630.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
USD/CAD	1.0630	1.0710	1.0745	1.0750	1.0800

Focus Chart of the Day: EUR/USD



We highlighted the chart above last week. It is a monthly chart of EUR/USD with key Fibonacci retracement and extension levels drawn off yearly highs and lows since 2008. This morning the exchange rate is testing the low end of a confluence zone. If the rate can manage a close sub 1.3460 this week we think it will be strong evidence that the euro is finally embarking on a more significant decline. More importantly this should set the stage for a generally weak second half of the year. In the longer-term scheme of things 1.3730 needs to be reclaimed to neutralize the negative picture.



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Talking Points

• EUR/USD records new low for the year
• AUD/NZD continues higher from key cycle turn window
• S&P 500 unbreakable?

Price & Time Analysis: EUR/USD

• EUR/USD touched its lowest level of the year on Wednesday before rebounding off the 127% extension of the June/July advance near 1.3455
• Our near-term trend bias is lower in the rate while below 1.3550
• A daily close under 1.3455 is needed to confirm a broader move lower
• A cycle turn window is eyed later this week
• A move back over 1.3550 would turn us positive on the euro

EUR/USD Strategy: Like holding only reduced short positions into this turn window.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
EUR/USD	1.3405	1.3455	1.3470	1.3550	1.3590

Price & Time Analysis: AUD/NZD

• AUD/NZD has moved sharply higher from the cycle turn window we highlighted early last week
• Our near-term trend bias is higher in the cross while over 1.0765
• The next major resistance zone is seen around 1.0925
• Very minor cycle turn windows are eyed on Thursday and Tuesday
• A move under 1.0765 would shift our near-term trend bias to negative

AUD/NZD Strategy: Like the long side while above 1.0765.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
AUD/NZD	1.0765	1.0825	1.0875	1.0900	1.0925

Focus Chart of the Day: S&P 500



US equity markets underwent a hiccup last week (if you can even call it that) around the mid-month cyclical turn window we highlighted. Since then the S&P 500 has managed to punch through to a new all-time high while the Dow is dangerously close. All we can say is the resilience of the indices is quite remarkable - especially when taking into account some of the extremes in sentiment we have witnessed recently. The action of the past few days obviously puts our favored scenario of a multi-week/month correction into serious doubt, but we would like to give it just a little more time as a loose interpretation of the cycles has the window for a turn extending as far as the second half of this week. In the S&P 500 key resistance remains between 1989 and 2006 and the top end of this zone really needs to be overcome to signal that the trend is resuming in earnest.

The action last week off 1948 confirms it as a meaningful pivot and weakness under this level is needed to confirm the start of any sort of meaningful corrective phase. Early September looks to be the next turn window of any potential significance.


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Talking Points

• EUR/USD cracking critical support
• USD/JPY nearing important break?
• Gold closing in on key support level

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

• EUR/USD broke under a key Fibonacci confluence this week to trade to new lows for the year
• A weekly close under 1.3470 will shift our broader trend bias to negative on the euro
• The 1.3395 area is the next important zone of support
• An important turn window is eyed around the first week of August
• A weekly close back over 1.3700 would turn us positive again on the euro

Weekly EUR/USD Strategy: Will go square on a close under 1.3470. Will look to sell into strength in the weeks ahead.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
EUR/USD	1.3130	1.3395	1.3440	1.3700	1.3820

Weekly Price & Time Analysis: USD/JPY

• USD/JPY has moved steadily higher over the past week from near the multi-month range lows
• However, our broader bias is negative in the rate while below 102.25
• A close under 100.75 is needed to signal a resumption of the broader decline
• The next turn window of importance is eyed near month end
• Only strength over 102.25 will turn us positve on USD/JPY

Weekly USD/JPY Strategy: Like tactical short positions in USD/JPY while below 102.25.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
USD/JPY	100.75	101.05	101.80	102.25	102.80

Weekly Price & Time Analysis: GOLD

• XAU/USD has come under steady pressure since failing near a key Gann confluence zone in the 1348 area
• Weakness under 1305 has turned us negative on the metal
• The 1280 area is a key downside pivot with weakness below this zone needed to set off a more important decline
• A turn window is eyed in early August
• A move back through 1321 on a daily close basis would turn us positive again on the metal

Weekly XAU/USD Strategy: Square here.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
XAU/USD	1262	1280	1295	1321	1348

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


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Talking Points:

• US Dollar Reaches 6-Week High as Recovery Continues
• S&P 500 Technical Setup Reveals Topping Cues Again
• Crude Oil Ranging Below 104.00, Gold Inching Lower

US DOLLAR TECHNICAL ANALYSIS – Prices continue to advance as expected after putting in a Bullish Engulfing candle pattern at support set from October 2013. Near-term resistance is at 10481, a horizontal pivot in play since April. A daily close above that exposes 38.2% Fibonacci retracement at 10513. Alternatively, reversal back below the 23.6% level at 10456 clears the way for a test of a rising trend line set from the July 1 low, now at 10443.



S&P 500 TECHNICAL ANALYSIS – Prices put in a bearish Evening Star candlestick pattern, hinting a move lower may be ahead. Negative RSI divergence bolsters the case for a downside scenario. A daily close below rising channel floor support at 1967.00 exposes the 23.6% Fibonacci retracement at 1948.40. Near-term resistance is at 1991.40, the July 24 high.



GOLD TECHNICAL ANALYSIS – Prices are drifting cautiously lower having topped below $1350/oz three weeks ago. Near-term support is in the 1284.95-87.13 area, marked by a falling trend line set from late June and the 38.2% Fibonacci expansion. A break below that on a daily closing basis exposes the 50% level at 1269.22. Alternatively, a reversal above the 23.6% Fib at 1309.20 eyes the 14.6% expansion at 1322.94.



CRUDE OIL TECHNICAL ANALYSIS – Prices are consolidating above support at 101.87, the 23.6% Fibonacci expansion. A break below that on a daily closing basis exposes the 38.2% level at 100.61. Near-term resistance is at 103.91, the July 18 high, with a move above that eyeing 104.73.




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


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USD/JPY

• USD/JPY closed above the 101.80 2x1 Gann angle line of the year’s high on Friday (the first time since early April)
• Our near-term trend bias is higher in the exchange rate while over 101.05
• A daily close over 102.25 is needed to confirm the start of a more serious advance
• A minor cycle turn window is eyed mid-week
• Weakness below 101.05 would undermine the burgeoning positive technical structure

USD/JPY Strategy: Like buying USD/JPY on a move through 102.25.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
USD/JPY	101.05	101.35	101.80	102.00	102.25

GOLD

• XAU/USD has come under steady pressure over the past couple of weeks
• Our near-term trend bias is lower in the metal while below 1321
• A close under 1281 is needed to instill any sort of negative momentum
• A cycle turn window is seen next week
• Strength back through 1321 would turn us positive on Gold

XAU/USD Strategy: Square here.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
XAU/USD	1266	1281	1305	1321	1338

Focus Chart of the Day: USD/CAD


We should learn a lot about the true intentions of the current move higher in USD/CAD over the next day or two. Our cyclical analysis suggests that if the rebound off the key support confluence area around 1.0650 has just been corrective then the exchange rate should turn back down around this time. Interestingly (as the chart above shows) this key moment in time is occurring right around an almost equally important price zone as the 200-day moving average, 2nd square root relationship of the month-to-date low, 1x1 Gann angle line of the year’s high and 61.8% retracement of the June decline all converge around 1.0820/30. If the pair is turning back down then these levels should probably hold. Strength through them (especially after Tuesday) would signal the move higher in USD/CAD has a lot more to run.


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Talking Points:

• US Dollar Stalls at 6-Week High Before Key Event Risk
• S&P 500 May Be Carving Out a Top Below 2000 Mark
• Crude Oil Aiming Below $101.00 After Support Break

US DOLLAR TECHNICAL ANALYSIS – Prices continue to advance as expected after putting in a Bullish Engulfing candle pattern at support set from October 2013. A daily close above the 23.6% Fibonacci retracement at 10456 has exposed a horizontal pivot at 10481. Pushing further beyond that targets the 38.2% level at 10513. Alternatively, reversal back below 10456 opens the door for a challenge of a rising trend line set from the July 1 low at 10447.



S&P 500 TECHNICAL ANALYSIS – Prices put in a bearish Evening Star candlestick pattern, hinting a move lower may be ahead. Negative RSI divergence bolsters the case for a downside scenario. A daily close below rising channel floor support at 1968.60 exposes the 23.6% Fibonacci retracement at 1948.40. Near-term resistance is at 1991.40, the July 24 high.



GOLD TECHNICAL ANALYSIS – Prices are drifting cautiously lower having topped below $1350/oz three weeks ago. Near-term support is in the 1284.09-87.13 area, marked by a falling trend line set from late June and the 38.2% Fibonacci expansion. A break below that on a daily closing basis exposes the 50% level at 1269.22. Alternatively, a reversal above the 23.6% Fib at 1309.20 eyes the 14.6% expansion at 1322.94.



CRUDE OIL TECHNICAL ANALYSIS – Prices edged below support at 101.87, the 23.6% Fibonacci expansion, exposing the 38.2% level at 100.61. This barrier is reinforced by a rising channel top at 100.28. A break below that on a daily closing basis eyes the 50% Fib at 99.58. Alternatively, a turn back above 101.87 eyes the July 18 highat 103.91.



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

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Talking Points

• EUR/USD closes at lowest level in seven months
• NZD/USD at multi-week low
• Turn window in Gold next week

Price & Time Analysis: EUR/USD

• EUR/USD closed at its lowest level in seven months on Friday before recovering modestly off the 6th square root relationship of the 2013 low near 1.3430
• Our near-term trend bias is lower in the euro while below 1.3545
• A daily close below a key Fibonacci confluence in the 1.3395 area is needed to set off a more material move lower
• A very minor cycle turn window is tomorrow ahead of a more important one around the middle of next week
• A move over 1.3545 would turn us positive on the euro

EUR/USD Strategy: A low next week would not surprise. We like holding only a reduced short position while under 1.3545.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
EUR/USD	1.3395	1.3430	1.3430	1.3545	1.3590

Price & Time Analysis: NZD/USD

• NZD/USD has come under fairly aggressive pressure over the past few weeks
• Our near-term trend bias is lower in the Bird while under .8650
• The 78.6% retracement of the June /July advance at .8495 is an important near-term pivot with weakness below needed to set up a test of a major Gann attraction near .8460
• The next important cycle turn window is seen early next week
• A move over .8650 would turn us positive on the Kiwi

NZD/USD Strategy: Like the short side while below .8650.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
NZD/USD	.8460	.8495	.8515	.8590	.8650

Focus Chart of the Day: GOLD



The beginning of summer was important for Gold from a cyclical perspective as several key long-term relationships converged around that time. For this reason we believe the low at the start of June was significant and should lead to an important trend move higher during the second half of the year. However, over the past couple of weeks the metal has come under fairly steady pressure. The next important turn window is eyed around the middle of next week and the metal needs to turn back up around this time to confirm that our broader positive view is indeed correct. Key support over the next week looks to be between 1280 and 1270 and this area needs to hold.


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