Technical Analysis

• EURUSD and USDCHF LONG TERM momentum pattern implications
• USDJPY rebounds at year open
• NZDUSD next leg lower soon?

EURUSD
Monthly



-“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.” The former scenario is on track so look for a top.
-BIG picture, monthly RSI has broken out of a triangle pattern. Sometimes, a pattern breakout in momentum (or OBV) precedes the breakout in price. The development’s implications are obviously significant.

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 has followed through on the 10/15 reversal but strong resistance is seen from 1.6160 and 1.6250. The trend is down against 1.6524 and 1.5750 is the next possible support.

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



-“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).” USDJPY dropped into the December high (and 2014 year open) this week, which provided support. Given the significance of the level at the recent top, I’m inclined to look at the short side on strength.

USD/CAD
Monthly



-USDCAD traded to its best levels since July 2009 this week but finished in the middle of its range for the week. The close and weak momentum profile casts doubt regarding the validity of the breakout but continue to look higher as long as price is above 1.1080. The rate also encounters potential resistance near 1.1450 from the upward sloping line that connects the October and 2011 and March 2014 highs.

USD/CHF
Monthly



-USDCHF traded into the .9300-.9430 support zone this week, which may reset the market for another rally attempt. Remember, USDCHF broke above the trendline that extends off of the 2001 and 2010 highs. Like EURUSD, USDCHF monthly RSI broke from a potentially long term basing pattern. As long as .9300 holds, look higher.



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Talking Points:

• US Dollar Remains in Digestion Mode at Channel Support
• S&P 500 Attempting to Clear a Path Above 1900 Figure
• Crude Oil Hints at Bounce, Gold Capped Below $1250/oz

US DOLLAR TECHNICAL ANALYSIS – Prices declined as expected after putting in a bearish Dark Cloud Cover candlestick pattern. Near-term support is at 10898, marked by a falling channel bottom, with a break below that on a daily closing basis exposingthe 38.2% Fibonacci retracementat 10845. Alternatively, a reversal above the channel top at 11052 opens the door for a challenge of 11143, the October 3 high.



S&P 500 TECHNICAL ANALYSIS – Prices recovered after hitting a six-month low, with buyers testing resistance marked by the 38.2% Fibonacci retracement at 1896.50. A daily close above this barrier exposes the 50% level at 1920.50. Alternatively, a turn back below the 23.6% Fib at 1866.90 targets the 14.6% retracement at 1848.60.


GOLD TECHNICAL ANALYSIS – Prices advanced as expected after putting in a bullish Piercing Line candlestick pattern. A break above the 38.2% Fibonacci retracement at 1244.88 on a daily closing basis exposes the 50% level at 1264.01. Alternatively, a turn below the 23.6% Fib at 1221.20 targets the 14.6% retracement at 1206.61.



CRUDE OIL TECHNICAL ANALYSIS – Prices put in a Bullish Engulfing candlestick pattern, hinting a bounce may be ahead. A break above the 14.6% Fibonacci retracement at 87.67 exposes channel floor support-turned-resistance at 88.88. Near-term support is at 82.88, the October 15 low.



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


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Talking Points

• USD/JPY rebounds off key Gann level
• GBP/USD testing important near-term pivot
• USD/MXN stalls at key time barrier

USD/JPY

• USD/JPY has rallied steadily since closing on the 4th square root relationship of the year’s high around 105.80
• Our near-term trend bias remains lower while below 107.45
• A close under 105.90 is needed to set off a new leg lower in the pair
• A turn window is eyed around the end of the week
• A close back over 107.45 is needed to re-focus higher in USD/JPY

USD/JPY Strategy: Like the short side while below 107.45.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
USD/JPY	105.40	105.90	106.80	107.00	107.45

GBP/USD

• GBP/USD has traded steadily higher since finding support last week near the 10th square root relationship of the year’s high near 1.5880
• Our near-term trend bias is higher in Cable while over 1.6010
• A close over 1.6180 is needed to trigger a more serious correction in the exchange rate
• A minor turn window is eyed today
• A close under 1.6010 would turn us negative on the exchange rate

GBP/USD Strategy: Square.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
GBP/USD	1.6010	1.6085	1.6150	1.6180	1.6225

USD/MXN


Last week we witnessed a nice convergence of cyclical relationships in USD/MXN. The uptrend in the exchange rate has stalled around this time barrier, but so far downside price action has been less than impressive. A close in the next day or so under 13.5000 is really needed to confirm that some sort of high is place. On the topside, the 61.8% retracement of the 2012/2013 range near 13.5800 is critical resistance as a close over this level would invalidate the near-term negative cyclical potential. More importantly such an easy push through this “time resistance” would further validate the strength of the trend in place since June and set the stage for an important push higher in USD/MXN into December.

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


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Talking Points

• EUR/USD stalls at key downside pivot level
• S&P 500 testing key retracement zone
• Important 24 hours for USD

EUR/USD

• EUR/USD has come under steady pressure over the past few days after failing last week near the 1.2835 3rd square root relationship of the year’s low
• Our near-term trend bias remains higher while above 1.2585
• A move through 1.2745 is needed to re-instill any sort of upside momentume in the pair
• A minor turn window is seen today ahead of a more important cyclical inflection point next week
• A close under 1.2585 will turn us negative on the euro

EUR/USD Strategy: Square

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
EUR/USD	1.2585	1.2605	1.2665	1.2700	1.2745

Price & Time Analysis: S&P 500

• S&P 500 has moved sharply higher over the past few days after finding support at the 161.8% projection of the late September decline in the 1820 area
• Our near-term trend bias is negative in the index while under 1980
• The 2nd square root relationship of the month’s low at 1908 is an important downside pivot
• A turn window is eyed around the 1st week of next month
• A close over 1980 will turn us positive on the index

S&P 500 Strategy: Square.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
S&P 500	1908	1925	1939	1951	1980

Focus Chart of the Day: FXCM US DOLLAR INDEX



There is a lot of excitement in the air at the moment that the USD is resuming its broad advance. We are sympathetic to this view as the medium and longer-term cycles look pretty clearly positive for the Greenback over the next few months. The short-term wiggles are a little different story, however, as a few of the main currency pairs suggest that we could see a few more days of dollar weakness before the advance begins in earnest. The action over the next 24 hours or so should prove key in determining whether the correction of the past few weeks has more life in it or not as USD strength past today would be an incredibly strong signal that the Buck has indeed truly started higher. A key level to watch in the FXCM US Dollar Index (equally weighted USD basket) is 11,038. Failure to gain a foothold above this level today will warn that the correction isn’t quite finished.

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


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• GBPUSD at a crossroads
• USDJPY trades into Fibonacci resistance

EUR/USD
Weekly


-BIG picture, monthly RSI has broken out of a triangle pattern. Sometimes, a pattern breakout in momentum (or OBV) precedes the breakout in price. The development’s implications are obviously significant.
-Near term, price action since the October low likely composes a 4th wave correction within a 5 wave decline from the May high. Allow for additional sideways trading in order to complete wave 4 before a new low in wave 5 targets 1.2400 or 1.2315.

GBP/USD
Weekly


-GBPUSD is at a crossroads. The trend is down against 1.6184 but recent activity warns of a turn. The rate carved a key reversal last week and action since the low is constructive (decline from 1.6184 found low at the 61.8% of prior rally). Exceeding 1.6184 would confirm a 3 week bottoming pattern and yield an objective near 1.65.

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. Near term measured objectives from the triangle that has been underway since 10/3 sit at .8500 and .8400. Exceeding .8900 would open up .9020/70 and delay the immediate bearish outcome.

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.”
-The gap from Labor Day 2013 has held as support but this week’s spike into .8034 (just shy of the February low at .8050) probably completed 3 weeks of consolidation. In other words, start looking lower again. Ultimately, weakness below .7370 would confirm a double top with an objective of .5898.

USD/JPY
Weekly


-“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).”
--Former resistance at 105.43 served as support and USDJPY has responded to the 61.8% retracement of the decline. Another down leg is favored given the impulsive nature of the drop. Resistance extends from the current level to 108.87.

USD/CAD
Weekly


-USDCAD traded to its best levels since July 2009 this week but finished in the middle of its range for the week. The close and weak momentum profile casts doubt regarding the validity of the breakout but continue to look higher as long as price is above 1.1080. The rate also encounters potential resistance near 1.1450 from the upward sloping line that connects the October and 2011 and March 2014 highs.

USD/CHF
Weekly


-“USDCHF weakness has reset the market for another rally attempt. Remember, USDCHF broke above the trendline that extends off of the 2001 and 2010 highs. Like EURUSD, USDCHF monthly RSI broke from a potentially long term basing pattern. As long as .9358 holds, look higher.” .9740 could serve as resistance for the next top.



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Talking Points:

• US Dollar May Correct Downward Before Rising Trend Continues
• S&P 500 Clears a Path Above 2000 After Chart Resistance Break
• Crude Oil Range-Bound, Gold Prices Approaching Monthly Low

US DOLLAR TECHNICAL ANALYSIS – Prices appear to be on track to resume its longer-term rising trend after completing a Flag continuation pattern last week. A daily close above the 11102-43 area marked by the 23.6% Fibonacci expansion and the October 3 high exposes the 38.2% level at 11216. The appearance of a Shooting Star candle warns a near-term pullback may be in the cards however. A turn below the 10959-78 zone (rising trend line, 23.6% Fib retracement) clears the way for a test of the 38.2% threshold at 10845.



S&P 500 TECHNICAL ANALYSIS – Prices resumed their advance after a brief pause, with buyers now aiming to challenge resistance marked by the 38.2% Fibonacci expansion at 2010.10. A break above that on a daily closing basis exposes the 50% level at 2028.30. Alternatively, a reversal below the 23.6% Fib at 1987.70 targets the 14.6% expansion at 1973.80.



GOLD TECHNICAL ANALYSIS – Prices turned lower as expected after putting in a bearish Evening Star candlestick pattern. Sellers now aim to challenge the 38.2% Fibonacci expansion at 1193.16, with a break below that on a daily closing basis exposing the 1173.99-78.86 area marked by the December 2013 low and the 50% level. Alternatively, a reversal back above the 23.6% Fib at 1216.87 aims for the 14.6% expansion at 1231.49.



CRUDE OIL TECHNICAL ANALYSIS – Prices put in a Bullish Engulfing candlestick pattern, hinting a bounce may be ahead. A break above 87.67, the intersection of the 14.6% Fibonacci retracement and channel floor support-turned-resistance, exposes the 23.6% level at 90.62. Near-term support is at 82.88, the October 15 low.



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


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Talking Points

• EUR/USD trades at a new low for the year
• USD/JPY surges past 112.00
• USD/CHF OBV at new highs, spot is not

Daily Volume Chart: EUR/USD

• EUR/USD broke below the early October low this week to trade at its lowest level since August of 2012
• Above average volume over the past couple of days indicates the broader downtrend is attempting to reassert itself
• New yearly low in On-Balance-Volume (OBV) is also supportive of a broader downside resumption
• A move over 1.2765 on above average volume is required to refocus higher

Daily Volume Chart: USD/JPY

• USD/JPY exploded higher on Friday to trade at its highest level since December of 2007
• Increase in volume over past couple of days is supportive on the uptrend
• New high in OBV also very supportive of the broader advance
• A close under 110.10 on above average volume would turn us negative on USD/JPY

Daily Volume Chart: USD/CHF

• USD/CHF has moved steadily higher over the past few days, but so far has been unable to surpass the early October yearly high
• Rise in daily volume over past couple of days is potentially supportive of a broader upside resumption
• New yearly highs in OBV is also potentially positive
• A daily close under .9440 would turn us negative on USD/CHF

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


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• USDJPY range expansion level is 115
• EURUSD 5th wave underway then big reversal risk
• USDCAD outside week provides reference point for breakout

EUR/USD
Weekly



-BIG picture, monthly RSI has broken out of a triangle pattern. Sometimes, a pattern breakout in momentum (or OBV) precedes the breakout in price. The development’s implications are obviously significant.
-“Near term, price action since the October low likely composes a 4th wave correction within a 5 wave decline from the May high. Allow for additional sideways trading in order to complete wave 4 before a new low in wave 5 targets 1.2400 or 1.2315.” EURUSD is at a new low and focus shifts to identifying possible reversal points for the end of wave 5. Wave 5 (from 1.2886) would equal wave (1.3993-1.3502) at 1.2395. Equality between waves 5 and 1 is a common relationship.

GBP/USD
Weekly



-“GBPUSD is at a crossroads. The trend is down against 1.6184 but recent activity warns of a turn. The rate carved a key reversal last week and action since the low is constructive (decline from 1.6184 found low at the 61.8% of prior rally). Exceeding 1.6184 would confirm a 3 week bottoming pattern and yield an objective near 1.65.”
-The rate traded 1.6181 this week before sinking to new lows. Favor the downside as long as price is below trendline resistance. The next major support is 1.5720/50.

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).”
-Weakness has extended below the line that extends off of the 2008 and 2014 lows, warning of something much more significant on the downside. The 10/29 outside day reversal keeps me looking lower. A new low would expose expansion objectives at .8476 and .8373. Below .8744 should open the spigot.

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.”
-“The gap from Labor Day 2013 has held as support but last week’s spike into .8034 (just shy of the February low at .8050) probably completed 3 weeks of consolidation. In other words, start looking lower again. Ultimately, weakness below .7370 would confirm a double top with an objective of .5898.”

USD/JPY
Monthly



-Today’s USDJPY move is the 3rd largest one day rally since the 2011 low (all 3 moves are BoJ moves). In fact, the all-time low was exactly 3 years ago today. Where to now? The biggest (and most obvious) level that sticks out is 115.00/50 (range expansion level and inflection points in 2002 and 2007). 113.10 is a possible pausing point (61.8% of prior range added to breakout level).

USD/CAD
Weekly



-“USDCAD traded to its best levels since July 2009 this week but finished in the middle of its range for the week. The close and weak momentum profile casts doubt regarding the validity of the breakout but continue to look higher as long as price is above 1.1080. The rate also encounters potential resistance near 1.1450 from the upward sloping line that connects the October and 2011 and March 2014 highs.” Risk can be moved up to 1.1120.

USD/CHF
Weekly



-“USDCHF weakness has reset the market for another rally attempt. Remember, USDCHF broke above the trendline that extends off of the 2001 and 2010 highs. Like EURUSD, USDCHF monthly RSI broke from a potentially long term basing pattern. As long as .9358 holds, look higher.” .9740 could serve as resistance for the next top.



More...

Talking Points:

• US Dollar Corrects Lower Following Breach of October Top
• S&P 500 Still Treading Water Near September Swing High
• Crude Oil, Gold Prices Decline to Levels Unseen Since 2010

US DOLLAR TECHNICAL ANALYSIS – Prices corrected downward after piercing October’s high to hit the strongest level in over four years. Near-term resistance is at 11216, the 38.2% Fibonacci expansion, with a break above that on a daily closing basis exposing the 50% level at 11308. Alternatively, a reversal below the 11102-43 area marked by the October 3 high and the 23.6% Fib opens the door for a challenge of trend line support at 10993.



S&P 500 TECHNICAL ANALYSIS – Prices have returned to test resistance at 2022.10, the September swing high, with a break above that on a daily closing basis exposing the 38.2% Fibonacci expansion at 2035.20. Alternatively, a reversal below the 23.6% level at 2009.80 aims for the 14.6% Fib at 1994.20.



GOLD TECHNICAL ANALYSIS – Prices turned lower as expected after putting in a bearish Evening Star candlestick pattern. A daily close below the 61.8% Fibonacci expansion at 1154.82 exposes the 76.4% level at 1131.11. Alternatively, a reversal back above the 1173.99-78.86 area (December 2013 low, 50% Fib) aims for the 38.2% expansion at 1193.16.



CRUDE OIL TECHNICAL ANALYSIS – Prices are back under pressure, with a breach below the 14.6% Fibonacci expansion at 83.12 exposing the 23.6% level at 80.17. A further move below that aims for the 38.2% Fib at 75.38. Alternatively, a reversal back above 83.12 targets falling channel floor support-turned-resistance at 86.05.



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


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Talking Points

• USD/JPY closing in key extension level
• Crude nears important Fibonacci convergence zone
• Nagging divergence persists in USD/CHF

Price & Time Analysis: USD/JPY

• USD/JPY traded at its highest levels since December of 2007 earlier today
• Our near-term trend bias is higher in USD/JPY while above 113.15
• The 200% extension of the October decline near 115.00 in the next important resistance zone
• A minor turn window is seen early next week
• A daily close under 113.15 would turn us negative on USD/JPY

USD/JPY Strategy: Like the long side while over 113.15.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
USD/JPY	113.15	113.75	114.45	114.45	115.00

Price & Time Analysis: USOil

• Crude cracked the 2012 low yesterday to trade at its lowest level in three years
• Our near-term trend bias is lower in the commodity while below 82.80
• A convergence of the 50% retracement of the 2008-2011 advance and the 200% extension of the 1H14 range around 75.50/74.80 is the next major downside attraction/pivot
• An important turn window is eyed around the latter part of the month
• A close over 82.80 is needed to undermine the immediate negative tone in Crude

Crude Strategy: Like the short side while under 82.80

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
Crude	74.80	75.50	77.15	79.60	82.80

Focus Chart of the Day: USD/CHF



The dollar is generally stronger this morning led once again by USD/JPY. There are signs that the latest push higher in the Greenback is becoming more broad based as Cable managed to eke out a new low for the year in early European trade. USD/CHF still remains a point of contention for us as we view the exchange rate in the same vein that Dow theorists view the Transports. USD/CHF printed a new high for the year this week, but only barely and failed to register a new closing high for 2014. We would like to see the exchange rate close over .9667 or break meaningfully above .9690 to negate this potential divergence with the euro and set the stage for a meaningful push higher in the USD into the end of the year. Cyclical analysis suggests that a failure to achieve a new high in USD/CHF over the next few sessions could delay meaningful gains in USD/Europe for several weeks.



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