Technical Analysis

Talking Points:

• US Dollar Has Erased Nearly Half of Its Year-to-Date Drop
• S&P 500 Turns Aggressively Lower After Topping Sub-2000
• Crude Oil Hits New 4-Month Low as Sharp Selloff Continues

US DOLLAR TECHNICAL ANALYSIS – Prices broke above yet another layer of resistance after reversing upward as expected having put in a Bullish Engulfing candle pattern. Near-term resistance is at 10560, the 50% Fibonacci retracement. A daily close above that exposes 61.8% level at 10606. Alternatively, a turn back below the May 28 high at 10531 opens clears the way for a test of the 38.2% Fib at 10513.



S&P 500 TECHNICAL ANALYSIS – Prices turned lower as expected after putting in a bearish Evening Star candlestick pattern bolstered by negative RSI divergence. Sellers now aim to challenge the 38.2% Fibonacci retracement at 1921.80, with a break below that on a daily closing basis exposing the 50% level at 1900.30. Alternatively, a reversal above the 23.6% Fib at 1948.40 clears the way for a challenge of the 14.6% retracement at 1964.80.



GOLD TECHNICAL ANALYSIS – Prices are drifting cautiously lower having topped below $1350/oz three weeks ago. Near-term support is in the 1281.38-87.13 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 continue to race downward, with sellers now aiming to challenge the 76.4% Fibonacci expansion at 97.30. A break below that on a daily closing basis exposes a rising trend line set from June 2012, now at 96.28. Alternatively, a reversal above the 61.8% level at 98.56 aims for the 50% Fib at 99.58.



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

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Talking Points

• Key week for the euro
• Gold lacking momentum for now
• Important month for the FX markets as a whole?

Price & Time Analysis: EUR/USD

• EUR/USD touched its lowest level in almost nine months today
• Our near-term trend bias is lower in the euro while under 1.3450
• The 1.3315/1.3300 area is the next important downside attraction
• An important cycle turn window is seen this week
• A move over 1.3450 would turn us positive on the euro

EUR/USD Strategy: Like only a minimal short position while below 1.3450. Will look to stop and reverse on any move through 1.3450.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
EUR/USD	1.3300	1.3330	1.3340	1.3400	1.3450

Price & Time Analysis: GOLD

• XAU/USD is in consolidation mode above 1280
• Our near-term trend bias is lower while below 1300
• Critical support is eyed between 1280 and 1262 with weakness below needed to kick off a more important move lower
• A cycle turn window is eyed late this week
• A move over 1300 would turn us positive on the metal

XAU/USD Strategy: Square, but will look to go long on a move through 1300.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
XAU/USD	1262	1280	1286	1300	1321

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


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Talking Points:

• US Dollar Appears Vulnerable to a Corrective Down Move
• S&P 500 Probing Below 1900 as Selling Pressure Mounts
• Crude Oil Aims Higher at Support, Gold Bounce Continues

US DOLLAR TECHNICAL ANALYSIS – Prices may be setting up for a pullback after rallying as expected having put in a Bullish Engulfing candle pattern. The emergence of negative RSI divergence below resistance at 10560, the 50% Fibonacci retracement, warns of ebbing upside momentum. A daily close below the 38.2% level at 10513 exposes a rising trend line established from the July 1 low, now at 10481. Alternatively, a push through resistance opens the door for a test of the 61.8% Fib at 10606.



S&P 500 TECHNICAL ANALYSIS – Prices declined as expected after putting in a bearish Evening Star candlestick pattern with negative RSI divergence. A break below the 38.2% Fibonacci retracement at 1921.80 has exposed the 50% level at 1900.30. Moving further below that eyes the 61.8% Fib at 1878.70. Alternatively, a reversal back above 1921.80 opens the door for a test of the 23.6% retracement at 1948.40.



GOLD TECHNICAL ANALYSIS – Prices launched higher as expected after putting in a bullish Piercing Line candlestick pattern. Resistance is now at 1320.12, the 38.2% Fibonacci expansion. A break above that on a daily closing basis exposes the 50% level at 1332.49. Alternatively, a reversal below the 23.6% Fib at 1304.81 clears the way for a test of the 14.6% expansion at 1295.37.



CRUDE OIL TECHNICAL ANALYSIS – Prices are attempting to recover after putting in a bullish Piercing Line candlestick pattern above support at a rising trend line set from June 2012. Near-term resistance is at 98.93, the 14.6% Fibonacci expansion, with a break above that exposing the 23.6% level at 100.41. Trend lien support is now at 96.45.



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


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• EURUSD and USDCHF divergence still casts a cloud
• USDJPY Elliott channel in focus
• GBPUSD reaction zone at 1.6690-1.6750

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).”
-The break of 1.3476 completed a topping process with targets of 1.3294 (origin of diagonal), 1.3209 (2 equal legs), and 1.3012 (head and shoulders target). 1.3476-1.3512 is now resistance and 1.3550 is important to the integrity of the identified bear trend.

GBP/USD
Weekly



-“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.”
-Be aware that GBPUSD has reached possible ‘momentum support’ from the 50 level in RSI (weekly), and is nearing possible price supports from the 2011 high at 1.6745 and May low at 1.6692. Major support would come in from the 3 peaks in 2012 and this year’s low at 1.6250-1.6340.

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).”
-The May low and 200 DMA at .9200 is critical to the integrity of the uptrend.

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.”
-NZDUSD weakness from the July high is impulsive, which suggests that an important high is in place. 5 waves down also warn of a rally attempt. The current level, defined by the 200 DMA and trendline support, is a good place for that rally attempt to take place. Above .8500 is needed in order to suggest that the minor low 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 soon. Keep focused on the Elliott channel. The line crosses from about 100 to 100.75 for the remainder of August.

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.
-The USDCAD advance from the July low is impulsive and may find resistance near 1.1025/50 (61.8% and June high) before correcting lower.

USD/CHF
Weekly



-A divergence remains in place with regards to EURUSD and USDCHF (USDCHF < YTD high while EURUSD is at its YTD low), which casts a cloud over the broader USD advance. USDCHF has also traded into and pulled back from channel resistance. .8970 is support and needs to hold in order to look higher.



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Talking Points

• Key test for risk coming up
• USD/JPY struggles higher
• Gold turned down at key Gann zone

Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: USD/JPY

• USD/JPY has struggled higher over the past few days following a successful re-test of the 2x1 Gann angle line of the year’s high
• Our near-term trend bias is higher in USD/JPY while above 101.50
• A close over 102.80 will get us more excited about the possibility of a more important move higher in the exchange rate
• A minor cycle turn window is seen later this week
• A close under 101.50 would turn us negative on USD/JPY

USD/JPY Strategy: Like the long side while over 101.50.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
USD/JPY	101.50	102.10	102.40	102.55	102.80

Price & Time Analysis: GOLD

• GOLD is in consolidation mode below a key Gann confluence in the 1315/21 area
• Our near-term trend bias is higher in the metal while over 1280
• A move through 1321 is needed to re-instill upside momentum in Gold
• A very minor turn window is seen today
• A move under 1280 would turn us negative on the metal

XAU/USD Strategy: Like the long side while over 1280.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
XAU/USD	1280	1300	1308	1321	1337

Focus Chart of the Day: S&P 500



The S&P 500 needs to be watched closely in coming sessions. Last week’s low near 1900 came a week before option expiration. It is a “coincidence” that just seems to keep happening. This occurrence probably favors general equity strength for at least a few more days, but we maintain the market is not quite out of the woods just yet. The strong bounce over the past few days has many convinced that the “buy the dip” mentality prevails. However, the high in the indices last month came during an important cycle turn window (See "Time to Be Skeptical of Equity Market Strength" from July 14th) that argues equities are susceptible to a drawdown period lasting a few months. The real test for us will come when the index reaches the area between 1954 and 1970. This is just the 61.8% and 78.6% retracements of the July/August decline. If something has indeed changed with respect to the uptrend in stocks and its behaviour then we would expect to see it materialize around there. If the index can just do what it has done in the past and blow right through it we will know there is a good chance that the party is likely to rage on.

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


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Talking Points

• EUR/USD consolidating above key Fib level
• USD/JPY closing in on key resistance zone
• Gold holding above key Gann level

Weekly Foreign Exchange Price & Time at a Glance:

Weekly Price & Time Analysis: EURUSD

• EUR/USD is in consolidation mode above the 200% extension of the June/July advance near 1.3325
• Our broader bias is negative in the euro while under 1.3560
• A close under 1.3300 is needed to confirm that a new leg lower is underway
• A turn window is eyed early next week
• A weekly close back over 1.3560 would turn us positive on the exchange rate

Weekly EUR/USD Strategy: We like selling on strength.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
EUR/USD	1.3300	1.3325	1.3390	1.3430	1.3560

Weekly Price & Time Analysis: USDJPY

• USD/JPY is trading near the top end of its multi-month consolidation
• Our broader bias is positive on the exchange rate
• A close over the 61.8% retracement of the April/May decline near 102.85 is needed as further confirmation that a more serious move higher is underway
• A minor cycle turn window is eyed next week
• Only weakness below 101.50 will turn us negative again on the exchange rate

Weekly USDJPY Strategy: Like the long side while over 101.50.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
USD/JPY	101.50	102.35	102.60	102.85	103.35

Weekly Price & Time Analysis: GOLD

• XAUUSD remains in a choppy range above key a key Gann confluence near 1280
• Our broader bias is positive on the metal while over 1280
• The 1320 area need to be overc oem on a closing basis to signal that a more important advance is unfolding
• An importan turn window is eyed next month
• A move under 1280 will turn us negative on Gold

Weekly XAUUSD Strategy: Like the long side awhile ab1280.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
XAU/USD	1262	1280	1294	1305	1321

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


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Talking Points:

• US Dollar May Drop Before Larger Advance Resumes Anew
• S&P 500 Continues March Upward, Eyeing July Swing Top
• Crude Oil Chart Setup Suggests a Rebound May Be Brewing

US DOLLAR TECHNICAL ANALYSIS – Prices turned lower as expected, completing a bearish Evening Star candlestick pattern and hinting at further losses ahead. Negative RSI divergence bolsters the case for a downward scenario. A daily close below the 14.6%Fibonacci retracement at 10547 exposes the 23.6% level at 10528. Alternatively, a move above the 38.2% Fib expansion at 10582 opens the door for a challenge of the 50% threshold at 10606.



S&P 500 TECHNICAL ANALYSIS – Prices declined as expected after putting in a bearish Evening Star candlestick pattern. A bounce following a test of the 1900.00 figure sees prices aiming for resistance at 1968.40, the 76.4% Fibonacci retracement, with a close above that targeting the July 24 high at 1991.40. Alternatively, a turn below the 61.8% Fib at 1954.20 aims for the 50% retracement at 1942.80.



GOLD TECHNICAL ANALYSIS – Prices turned lower anew, with sellers testing the 38.2% Fibonacci expansion at 1297.82. A break below this barrier on a daily closing basis exposes the 50% level at 1290.15. Alternatively, a reversal back above the 23.6% Fib at 1307.31 aims for the channel top at 1316.54.



CRUDE OIL TECHNICAL ANALYSIS – Prices put in a bullish Piercing Line candlestick pattern, hinting a rebound is ahead. Near-term resistance is at 97.05, the 14.6% Fibonacci retracement. A daily close above this barrier exposes the 23.6% level at 98.17. Initial support is at 95.24, the August 14 low.



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


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Talking Points

• GBP/USD breaks key long-term support level
• USD/JPY nearing critical resistance area
• Gold meanders

Price & Time Analysis: USD/JPY

• USD/JPY continues to edge higher off the 101.50 78.6% retracement of the July range
• Our near-term trend bias is higher in the exchange rate while above 101.50
• The 61.8% retracement of the April/May decline near 102.85 reamins an important upside pivot with a close over this level needed to confirm more serious move higher is underway
• A minor cycle turn window is seen on Wednesday
• A move under 101.50 would turn us negative on the rate

USD/JPY Strategy: We like the long side while above 101.50.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
USD/JPY	101.50	102.10	102.60	102.85	103.15

Price & Time Analysis: GOLD

• XAU/USD continues to chop around key Gann levels between 1321 and 1280
• Our near-term trend bias is positive on the metal while over 1280
• A move through 1321 is needed to confirm that a more meaningful move higher is in fact underway
• A cycle turn window of importance is seen around the start of next month
• A daily close under 1280 will turn us negative on Gold

XAU/USD Strategy: Like the long side while 1280 holds.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
XAU/USD	1280	1290	1300	1321	1327

Focus Chart of the Day: GBP/USD



The price action in Cable has been very interesting over the past few days. On Thursday the pound reversed from the 200-day moving average near 1.6660 almost to the pip. A gap higher was then seen on Monday morning after newspaper comments from the head of the Bank of England over the weekend. This strength proved short-lived, however, as the gap has been filled this morning with GBP/USD falling sharply lower and below the 200-day MA for the first time in almost a year. This action is a little surprising. We say this because we have noticed over the years that currency rates that spend an extended period of time over the 200-day MA tend to find support on the first test of the moving average. We like giving the pound a little more room as there is a decent chance this is just a slight undercut of the 200-day MA and part of some sort of larger temporary bottoming process. Tuesday and Wednesday’s close should prove important in this regard as a failure to get back over 1.6660 would turn the medium-term picture even more negative and undermine further the potential for a correction before September.


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Talking Points:

• US Dollar Soars to 6-Month High as Rally Regains Momentum
• S&P 500 Eyeing Pivotal Resistance Marked by July Swing Top
• Gold Selloff Continues for Third Day, Crude Oil May Rebound

US DOLLAR TECHNICAL ANALYSIS – Prices resumed their advance having reversed upward as expected after putting in a Bullish Engulfing candlestick pattern. A daily close above the 38.2% Fibonacci expansion at 10627 exposes the 50% level at 10652. Alternatively, a reversal back below the 23.6% Fib at 10595 opens the door for a challenge of the 14.6% expansion at 10576.



S&P 500 TECHNICAL ANALYSIS – Prices broke above the 38.2% Fibonacci expansion at 1963.70, exposing the 1985.30-91.40 area marked by the 50% level and the July 24 high. A further push beyond that aims for channel floor support-turned-resistance at 1999.10. Alternatively, a turn back below at 1963.70 targets the 23.6% Fib at 1937.10.



GOLD TECHNICAL ANALYSIS – Prices broke support at 1297.82, the 38.2% Fibonacci expansion, to expose. the 50% level at 1290.15. A further push below that targets the 61.8% Fib at 1282.47. Alternatively, a reversal back above 1297.82 opens the door for a test of the 23.6% expansion at 1307.31.



CRUDE OIL TECHNICAL ANALYSIS – Prices are testing support at 101.61, the 61.8% Fibonacci expansion, with a break below that on a daily closing basis exposing the 76.4% level at 99.96. Positive RSI divergence points to ebbing downside momentum however, warning a bounce may be ahead. A move above the 50% Fib at 102.94 targets the 103.81-104.28 area marked by a falling trend line and the 38.2% expansion.


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


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Talking Points

• EUR/USD touched multi-month low
• SPX nearing key resistance zone
• USD/JPY overcomes key pivot

Price & Time Analysis: EUR/USD

• EUR/USD has come under further pressure to touch its lowest level since late September
• Our near-term trend bias is lower in the euro while below 1.3430
• The 6th square root relationship of the year’s high at 1.3280 is a key pivot with a daily close below needed to confirm that a new leg lower is underway
• A cycle turn window is eyed on Thursday
• A move over 1.3430 would turn us positive on the euro

EUR/USD Strategy: We like holding only reduced short positions while below 1.3430.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
EUR/USD	1.3240	*1.3280	1.3280	1.3335	*1.3340

Price & Time Analysis: S&P 500

• S&P 500 has moved steadily higher since rebounding off the 2nd square root relationship of the all-time high near 1900
• Our near-term trend bias is negative on the index while under 1991
• A move under 1940 is really needed to instill any sort of downside momentum
• A cycle turn window is seen around the end of the month
• A daily close over 1991 will turn us positive again on the index

S&P 500 Strategy: Square

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
S&P 500	*1940	1970	1978	1980	*1991

Focus Chart of the Day: USD/JPY



Our bullish view on USD/JPY is finally starting to pay off. On Tuesday the exchange rate managed to close above the 101.75/85 resistance zone which has proven rather sticky for quite some time. The real question though is this the start of a bona fide run higher or just another false start like in early April? Given the compression in the exchange rate since over the past four months we favor the former as we view a long consolidation like that much like a tightly coiled spring. When it releases it tends to do so explosively. How USD/JPY reacts near 103.40 and 103.90 over the next day or so should clue us in to which scenario is unfolding as an easy push through these important resistance levels would indicate a clear change in the market’s behavior and give us more confidence that a trend is indeed developing. Failure to easily breach these levels, on the other hand, could mark the top of a range.


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