Technical Analysis

Talking Points:
points to ebbing bullish momentum. Near-ter

• US Dollar Chart Setup Warns of Losses as Upside Momentum Ebbs
• S&P 500 Recoils Higher from Support But Topping Pattern Intact
• Crude Oil Sinks to 26-Month Low, Gold May Be Readying a Bounce

US DOLLAR TECHNICAL ANALYSIS – Prices may be on the verge of a correction lower as negative RSI divergence m support is at 10931, marked by a rising trend line set from set from late August, with a break below that on a daily closing basis exposing the 14.6% Fibonacci retracement at 10875. Alternatively, a turn above the 14.6% Fib expansion at 10990 opens the door for a challenge of the 23.6% threshold at 11043.



S&P 500 TECHNICAL ANALYSIS – Prices rebounded from support at 1973.20, the 38.2% Fibonacci retracement. A reversal back above the 23.6% Fib at 1991.90 targets the 14.6% expansion at 2003.40. Alternatively, a break below support on a daily closing basis exposes the 50% level at 1958.10.



GOLD TECHNICAL ANALYSIS – Prices put in a bullish Morning Star candlestick pattern, hinting a move higher may be ahead. A break above the 14.6% Fibonacci retracement at 1227.91 on a daily closing basis exposes the 23.6% level at 1240.26. Near-term support is at 1207.88, the September 22 low.



CRUDE OIL TECHNICAL ANALYSIS – Prices edged below support at 96.73, the April 2013 low, exposing the 23.6% Fibonacci expansion at 95.11. A further push below that targets the 38.2% level at 92.34. Alternatively, a reversal back above 96.73 aims for the September 17 high at 99.59



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


More...

Talking Points

• EUR/USD cracks 2013 low
• Gold nears last year’s low
• USD/JPY stalls at long-term trendline

USD/JPY

• USD/JPY is in consolidation mode below the trendline connecting the 2002 and 2007 peaks in the 109.50 area
• Our near-term trend bias is higher while over 107.35
• A move through 109.50 is needed to set of the next leg higher in the rate
• An important turn window is seen early next month
• A close below 107.35 would turn us negative on the exchange rate

Like holding reduced long positions while above 107.35.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
USD/JPY	107.35	108.30	109.20	109.50	109.75

GOLD

• GOLD has come under renewed pressure over past couple of days to trade at lowest level since the start of the year
• Our near-term trend bias is lower in the metal while below 1235
• Interim support is eyed at 1203 and 1293 ahead of last year’s low at 1179
• A minor turn window is eyed here
• A close over 1235 would turn us positive on Gold

XAU/USD Strategy: Square.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
XAU/USD	1179	1293	1210	1235	1244

EUR/USD



EUR/USD has come under renewed pressure over the past few sessions to record its lowest level since November of 2012. In a strange way this is precisely what I want to see heading into the key cyclical period I have highlighted over the next few days as there is little ambiguity in what to look for. Almost like clockwork as the euro has begun to break down into this key period articles have begun to appear in the financial press explaining why the euro is such a clear sell. In my experience when the mainstream press finally “sees it” a move is much closer to its end than beginning. This development dovetails the extremes in sentiment recorded in the DSI since the start of the month (on Wednesday it fell back to 5% EUR Bulls or 95% USD Bulls) and the drop in the exchange rate to the bottom of the 1-year standard deviation channel (historically a good metric of an oversold market). Longer-term I think the euro is in trouble, but with this turn window hitting over the next few days and sentiment/positioning so extended and the market getting to key technical levels everything seems to be coming together for some sort of counter-trend recovery. Let’s see…


More...

Talking Points:

• US Dollar Sets 4-Year High, Working on 7th Straight Up Day
• S&P 500 Edging Downward as Sellers Eye September Bottom
• Gold Aims to Extend Down Move After Hitting a 9-Month Low

US DOLLAR TECHNICAL ANALYSIS – Prices are working on a seventh consecutive advance, extending to a new four-year high. A daily close above the 38.2% Fibonacci expansion at 11130 exposes the 50% level at 11200. Alternatively, a reversal back below the 23.6% Fib at 11043 clears the way for a test of rising trend line support at 11016.



S&P 500 TECHNICAL ANALYSIS – Prices continue to edge lower with a falling channel. Near-term support is 1963.40, the September 29 swing low, with a break below that on a daily closing basis exposing the channel floor at 1941.60. Alternatively, a move above the channel top at 1976.60 targets the 23.6% Fibonacci expansion at 1994.60.



GOLD TECHNICAL ANALYSIS – Prices resumed its down trend after a brief consolidative period, with sellers now aiming to test the 23.6% Fibonacci expansion at 1198.47. A break below that on a daily closing basis exposes the 1178.23-86 area marked by the 38.2% level and the December 31 2013 low. Alternatively, a turn back above the 14.6% Fib at 1210.94 aims for range top resistance at 1225.38.



CRUDE OIL TECHNICAL ANALYSIS – Prices edged past support at 95.11, the 23.6% Fibonacci expansion, to challenge falling channel floor support at 94.14. A break below that exposes the 38.2% level at 92.34. Alternatively, a turn back above the 95.11 eyes the 96.73-82 area, marked by the April 18 2013 low and the 14.6% Fib.



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


More...

Talking Points:

• US Dollar Produces First Back-to-Back Losses in Over a Month
• S&P 500 Taps 2-Month Low as Sellers Fight to Break Support
• Gold, Crude Oil Await Direction Cues at Familiar Chart Levels

US DOLLAR TECHNICAL ANALYSIS – Prices pulled back as expected after putting in a Shooting Star candlestick. A daily close below the 14.6% Fibonacci retracement at 11005 exposes the 23.6% level at 10956. Alternatively, a reversal above the 11048-60 area marked rising trend line support-turned-resistance and the 38.2% Fib expansion clears the way for a test of the 50% threshold at 11108.



S&P 500 TECHNICAL ANALYSIS – Prices are testing support at 1941.80, the 76.4% Fibonacci expansion, with a break below that exposing a falling channel floor at 1934.90 and the 100% level at 1928.20. Alternatively, a reversal above the 61.8% Fib at 1950.20 aims for the 50% expansion at 1957.10.



GOLD TECHNICAL ANALYSIS – Prices are treading water below resistance at 1221.70, the 14.6% Fibonacci retracement. A break above that on a daily closing basis exposes the 23.6% level at 1232.34. Alternatively, a reversal below the 23.6% Fib expansion at 1203.76 aims for the 38.2% threshold at 1186.80.



CRUDE OIL TECHNICAL ANALYSIS – Prices edged past support at 95.11, the 23.6% Fibonacci expansion, to challenge falling channel floor support at 93.91. A break below that exposes the 38.2% level at 92.34. Alternatively, a turn back above the 95.11 eyes the 96.73-82 area, marked by the April 18 2013 low and the 14.6% Fib.



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


More...

• EURUSD records lowest weekly RSI ever
• USDCAD flirts with a breakout
• NZDUSD fills gap from Labor Day 2013

EUR/USD
Weekly



-In keeping with the 3 year cycle tops (2008, 2011, and 2014), EURUSD has collapsed. Of course, every level that I had suspected would provide support for at least a bounce of several days has failed spectacularly. While the long term wave count points below 1.1875 (and much lower), one cannot ignore how extreme the current situation is and how long that extreme has been in place. Since the inception of the EURUSD, the rate had declined for 8 consecutive weeks once (March 2010). That resolved with a nearly 400 pip bounce before continued weakness. This week marks the 12th consecutive decline. Weekly RSI is at its lowest level ever. The prior RSI low registered in May 2010.
A countertrend surprise could happen at any time but I’d keep an eye on 1.2315-1.2400 (1998 high, 2008 low, weekly close of 2012 low week).

GBP/USD
Weekly



-GBPUSD has retraced half of the rally from the 2013 low and then some. The top side of the line that extends off of the 2011 and 2013 highs is a level to keep in mind but the next major support level is the November low at 1.5853, followed by the June 2013 high and 61.8% retracement at 1.5720/50. 1.6150-1.6224 is resistance.

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).”
-AUDUSD broke down from a head and shoulders top on 9/9. The target was reached 4 days after the pattern completed. Weakness has extended below the line that extends off of the 2008 and 2014 lows, warning of something much more significant on the downside. .8500 is a possible bounce level.

NZD/USD
Weekly



-“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.”
-“Above .8534 is needed in order to suggest that at least a minor low is in place. Look lower as long as price is below that level.” The pivot can be lowered to .8169. The February low is now resistance at .8050. The gap from Labor Day 2013 has held as support so far at .7720 but weakness below opens up the October 2009 high at .7634. Ultimately, weakness below .7370 would confirm a double top with an objective of .5898.

USD/JPY
Weekly



-“Treat wave 4 as complete as long as price is above 102.50 (103.00/30 is support). That means new highs in wave 5 (then risk of a major decline but don’t forget that ‘5ths’ can extend). 104.75 is a near term target.”
-“Focus is now on expansion targets at 108.33 and 110.12 as long as price is above 103.50.” The first target has already been reached. The latter level isn’t far from the August 2008 high at 110.65. There is also a trendline that extends from the 2001 and 2007 highs at the current level. 106.80-107.40 is support. At this point, USDJPY would have to break 105 to do real damage to the trend.

USD/CAD
Monthly



-“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 dip from 1.0997 found support at the 50% retracement of the 1.0620-1.0997 advance (the 61.8% is at 1.0764). The hold is a positive sign and I lean towards the upside until at least 1.1720-1.1875.

USD/CHF
Weekly



-USDCHF has blown through the 61.8% retracement of the decline from the 2012 high and the 2008 low at .9645 hasn’t influenced either. The July 2013 high at .9750 is in line with the close of the week that produced the 2012 high at .9742. Focus on this zone for resistance.



More...

Talking Points:

• US Dollar Advances Most in 16 Months, Hits Four-Year High
• S&P 500 Attempting to Break Out of Two-Week Down Trend
• Gold Aims to Extend Decline After Sliding to a 10-Month Low

US DOLLAR TECHNICAL ANALYSIS – Prices issued the largest daily gain in 16 months, rising to the strongest level since June 2010. Near-term resistance is at 11176, the 38.2% Fibonacci expansion, with a break above that on a daily closing basis exposing the 50% threshold at 11232. Alternatively, a turn below the 23.6% Fib at 11108 opens the door for a challenge of the 14.6% threshold at 11108.



S&P 500 TECHNICAL ANALYSIS – Prices are testing above falling channel resistance (1965.10) to challenge the 38.2% Fibonacci expansion at 1974.00. A break above this barrier on a daily closing basis exposes the 50% level at 1989.10. Alternatively, a reversal below the 23.6% Fib at 1955.30 targets the 14.6% expansion at 1943.80.



GOLD TECHNICAL ANALYSIS – Prices dropped to the lowest level in 10 months, with traders now aiming to challenge the 1177.24-78.86 zone marked by the December 2013 low and the 38.2% Fibonacci expansion. A break below this boundary exposes the 50% level at 1163.29. Alternatively, a reversal above the 23.6% Fib at 1194.51 targets the 14.6% expansion at 1205.15.



CRUDE OIL TECHNICAL ANALYSIS – Prices are aiming to challenge support at 90.11, the 38.2% Fibonacci expansion. A break below that exposes the 50% level at 87.73. Alternatively, a reversal above the 23.6% Fib at 93.04 aims for the 14.6% expansion at 94.85.



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


More...

Talking Points

• USD/JPY flirting with key downside pivot
• USD/CHF stalls by important Gann level
• Important test for US equities coming up

USD/JPY

• USD/JPY traded to its highest level in six years last week before stalling near the 161.8% extension of the 2Q13 range near 110.00
• Our near-term trend bias is lower while above 108.00 (closing basis)
• Interim resistance is eyed at 109.40, but a move through 110.10 is really needed to confirm a resumption of the broader trend
• A turn window of some importantance is eyed this week
• A close below 108.00 would turn us negative on the exchange rate

USD/JPY Strategy: Like holding reduced long positions while above 108.00 (closing basis).

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
USD/JPY	107.40	108.00	108.35	109.40	110.10

Price & Time Analysis: USD/CHF

• USD/CHF traded at its highest level in over a year on Monday before stalling near the 3rd square root relationship of the 2012 high
• Our near-term trend bias is lower in the rate while above .9515
• A move back through .9645 is needed to re-instill upside momentum
• A medium-term turn window is eyed this week
• A close under .9515 would turn us negative on the exchange rate

USD/CHF Strategy: Like holding reduced long positions while over .9515

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
USD/CHF	.9470	.9515	.9585	.9640	.9670

S&P 500



The next couple of days look to be important for the S&P 500. The decline from the Gann turn window in late September has proven persistent, but no real technical damage has been done yet to the daily chart. Will this change now? On Tuesday the index surprised many and fell sharply to close right on what we think is a key pivot at 1932. This level is just the 2nd square root relationship of the all-time high and a level that should probably hold if the market is in the midst of just another “healthy” pullback. A close below this level would be a clear change in behavior and a warning sign that the “buy the dip” mantra is no longer working. Normally on a clear break of the 2nd square root relationship we would be looking for a much deeper decline to follow but the big question mark for us is the proximity of the 200-day moving average (1905)? The index hasn’t tested the widely watched indicator in almost two years. We have found that in out observation of markets through the years that whenever an instrument has traded above the 200-day for an extended period of time (like two years) it tends to rebound on the first test of the support level. So a recovery around this level is somewhat to be expected which limits the potential downside. Obviously a failure to garner much support around the 200-day MA would be a major change in behavior and set the stage for a much more important decline, but these are a lot of “ifs”. The burden of proof remains on the bears and the technical breaks we citied are needed to get more excited about a meaningful corrective process. Traction back over the 50-day MA around 1975 is needed to alleviate our negative concerns and re-instill positive momentum in the SPX.



More...

Talking Points

• EUR/USD volume picture remains supportive
• Low volume in USD/JPY favors upside resumption
• USD/CHF turnover increase a cause for concern

EUR/USD

• EUR/USD fell to its lowest level in over two years last week
• Daily volume has been in a steady rise since July which bolsters the medium-term downtrend
• Recent recovery on modest volume is supportive of downtrend
• On-Balance-Volume (OBV) remains healthy, though needs to be watched closely if spot fall to new lows
• A moveunder 1.2500 on above average volume is needed to confirm a downside resumption

USD/JPY

• USD/JPY traded at its highest level since August of 2008 at the start of the month
• A steady rise in volume has accompanied the move higher since July
• Recent decline has been on well below average volume which favors an eventual trend resumption
• Move over 109.00 needed to signal that the trend is resuming

USD/CHF

• USD/CHF traded at its highest level in over a year last week
• Steady volume rise since July is supportive of advance
• Recent pullback on above average volume is a concern, even higher volume of Thursday is supportive of an upside resumption
• A daily close under .9465 on above average volume would shift focus lower

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


More...

• USDJPY signs of a major top
• AUDUSD reverses at year open…lookout below
• GBPUSD bear channel development

EUR/USD
Weekly



-“In keeping with the 3 year cycle tops (2008, 2011, and 2014), EURUSD has collapsed. While the long term wave count points below 1.1875 (and to parity), one cannot ignore how extreme the current situation is and how long that extreme has been in place. Since the inception of the EURUSD, the rate had declined for 8 consecutive weeks once (March 2010). That resolved with a nearly 400 pip bounce before continued weakness. Last week marked the 12th consecutive decline. Weekly RSI is at its lowest level ever. The prior RSI low registered in May 2010. US Dollar Index COT is at a record. A countertrend surprise could happen at any time but I’d keep an eye on 1.2315-1.2400 (1998 high, 2008 low, weekly close of 2012 low week).”
-The bounce this week relieved daily oversold conditions (not weekly) and the rally failed at former support from lows in 2013. IF EURUSD trades to a new low while staying below 1.2791 THEN a 5 wave decline from the May high is probably nearing completion. 1.2315/28 would be of interest for a low. IF EURUSD exceeds 1.2791 while staying above 1.2500, THEN expect resistance between 1.2865 and 1.30 and a move to new lows thereafter.

GBP/USD
Weekly



-“GBPUSD has retraced half of the rally from the 2013 low and then some. The top side of the line that extends off of the 2011 and 2013 highs is a level to keep in mind but the next major support level is the November low at 1.5853, followed by the June 2013 high and 61.8% retracement at 1.5720/50. 1.6150-1.6224 is resistance.”
-GBPUSD traded into resistance and failed. Look lower as long as below this week’s high towards 1.5750.

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).”
-AUDUSD broke down from a head and shoulders top on 9/9. The target was reached 4 days after the pattern completed. Weakness has extended below the line that extends off of the 2008 and 2014 lows, warning of something much more significant on the downside. .8500 is a possible bounce level.

NZD/USD
Weekly



-“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.”
-“Above .8534 is needed in order to suggest that at least a minor low is in place. Look lower as long as price is below that level.” The pivot can be lowered to .8169. The February low is now resistance at .8050. The gap from Labor Day 2013 has held as support so far at .7720 but weakness below opens up the October 2009 high at .7634. Ultimately, weakness below .7370 would confirm a double top with an objective of .5898.

USD/JPY
Weekly



-“Treat wave 4 as complete as long as price is above 102.50 (103.00/30 is support). That means new highs in wave 5 (then risk of a major decline but don’t forget that ‘5ths’ can extend). 104.75 is a near term target.”
-“Focus is now on expansion targets at 108.33 and 110.12 as long as price is above 103.50.” The first target has already been reached and the top is 4 pips from the latter level. 5 waves up from the 2011 low are counted which raises the risk of a sharp reversal lower from the trendline that extends off of the 2001 and 2007 highs. 106.80 and 105.40 are reaction levels (support).

USD/CAD
Monthly



-“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 dip from 1.0997 found support at the 50% retracement of the 1.0620-1.0997 advance (the 61.8% is at 1.0764). The hold is a positive sign and I lean towards the upside until at least 1.1720-1.1875.

USD/CHF
Weekly



-USDCHF has pulled back from near the 2008 low at .9645. The July 2013 high at .9750 is in line with the close of the week that produced the 2012 high at .9742. IF a new high is made while price above .9468 THEN that zone may produce a top for a 5th wave high. IF price trades below .9468 while below .9684 THEN look for support near .9400/30.



More...

Talking Points

• GOLD rally so far unimpressive
• AUD/USD consolidates above 1Q low
• EUR/USD consolidation continues

Price & Time Analysis: EUR/USD

• EUR/USD has traded in a sideways to higher range since finding support near 1.2500 at the start of the month
• Our near-term trend bias is higher in the euro while over 1.2605
• The 61.8% retracement of the 2012/2014 advance (polarity) at 1.2785 needs to be overcome to set off a more important correcttive move higher
• Early next week is the next minor turn window in the rate
• A close under 1.2605 would warn the downtrend has resumed ahead of schedule

EUR/USD Strategy: Like holding small long positions while above 1.2605.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
EUR/USD	1.2605	1.2645	1.2645	1.2700	1.2785

Price & Time Analysis: AUD/USD

• AUD/USD is in consolidation mode near the 1H14 lows
• Our near-term trend bias is lower in the Aussie while below .8840
• A close under .8660 is needed to set off a downside extension
• A minor turn window is eyed early next week
• A close over .8660 would turn us positive on the exchange rate

AUD/USD Strategy: Like selling on strength while below .8840.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
AUD/USD	.8660	.8710	.8720	.8760	.8840

Focus Chart of the Day: GOLD



Gold has managed to rally over the past couple of weeks, but the advance remains unimpressive especially given what has happened to global equities during the same period. If you talk to most they will say the metal should be benefit anytime there is turmoil in the risk markets, but history shows this isn’t really the case as Gold is often times caught between being viewed as a commodity and a currency/store of value. Clearly at the moment its commodity properties are weighing on it and keeping it from fully benefitting from the recent bout of risk aversion. For this regime to change it will probably require a much more serious decline in stocks. I remember vividly in 2008 having the same discussions with people as Crude and Gold were falling in tandem and the metal’s safe haven merits were then too being called into question. Then around October things changed and Gold began to rally while crude continued sharply lower. The regime had changed and Gold was once again a safe haven. It is important to note that the SPX is onlyaround 150 points off its all-time high. That was almost a day’s range on some days during that dark period in 2008/2009. My point being this is not a real serious “risk off” phase - at least yet. When things get truly dicey I have little doubt Gold will let us know.

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


More...