Technical Analysis

Talking Points:

• US Dollar Corrects Higher But Topping Cues Still Intact
• S&P 500 Fails to Hold Onto Gains on a Recovery Attempt
• Gold Mired in Consolidation, Crude Oil Continues to Sink

US DOLLAR TECHNICAL ANALYSIS – Prices moved lower as expected after prices put in a bearish Evening Star candlestick pattern. A daily close below the 23.6% Fibonacci retracementat 11379 exposes the 38.2% level at 11291. Alternatively, a turn above the 14.6% Fib at 11434 opens the door for a challenge of the December 8 high at 11522.



S&P 500 TECHNICAL ANALYSIS – Prices turned lower as expected, issuing the largest decline in two months. A push below the 2018.10-22.10areamarked by the 23.6%Fibonacci retracementand theSeptember 19 highexposes the 38.2% level at 1980.00. Alternatively, a reversal back above the 2041.50-49.10 zone (14.6% Fib, December 1 low) targets the 2075.90-79.60 region (November 26 and December 5 highs).



GOLD TECHNICAL ANALYSIS – Prices paused to consolidate after clearing resistance at a falling trend line set from early July. A break above the 50% Fibonacci retracement at 1237.59 on a daily closing basis exposes the 61.8% level at 1262.96. Alternatively, a turn back below the intersection of the trend line and the 38.2% Fib at 1212.23 targets the 23.6% retracement at 1180.84.



CRUDE OIL TECHNICAL ANALYSIS – Prices continued to move lower after yesterday’s brief respite, with sellers now eyeing the 76.4% Fibonacci expansion at 62.25. A break below that on a daily closing basis exposes the 100% level at 58.93. Alternatively, a reversal above the 61.8% Fib at 64.30 targets the 50% expansion at 65.96.



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


More...

• EURUSD weekly reversal
• AUDUSD fails to hold long term parallel
• USDCAD Fibonacci level at 1.1666

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.
-“After following through on the 11/7 reversal and exceeding the 11/4 high, it appeared that EURUSD was going to make an attempt at an important 1.2665/85 Fib zone before selling returned. That all changed in the course of a few hours on Friday. Still, the monthly is displayed in order to highlight the importance of the area just below. The line from the 2010 and 2012 lows is near 1.2230 next week whilst the 2008 low looms at 1.2330.”
-This combination of this week’s low at 1.2445 and the weekly reversal should not be ignored. The slope that had influenced prices for the entirety of the downtrend (at highs and lows) failed to do so last night. Establishing over 1.2500 would set the stage for a run higher.

GBP/USD
Daily



-“A period of congestion may be in order as price has bounced from near the 50% retracement of the advance from the 2013 low but the drop under 1.6050 produces a pivot high on 9/19 and allows one to draw a downward sloping channel. The channel is now in focus as resistance.”
-GBPUSD turned lower from mentioned channel resistance. Look lower as long as price is under 1.5825.

AUD/USD
Weekly



-“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.”
-AUDUSD was unable to hold a long term parallel. The risk is for lower prices with the May 2010 low at .8067 and the 2005 high at .7986 of interest as suppors.

NZD/USD
Weekly



-“NZDUSD traded to the 61.8% retracement of its 3 year range today (.7929) and the next level of interest probably isn’t until the 2013 Labor Day gap at .7722. One can’t help but notice that an epic double top is possible with a target of .5898. That would trigger on a drop below .7370 but this week’s high at .8169 is the pivot now.”

USD/JPY
Weekly



-“USDJPY has reached touched its 20 DMA for the first time since late October. Conditions are much more extreme than they were last year at this time but the 20 DMA propelled USDJPY higher last December before the big January decline.”
-The ‘snap back’ rally is nearing the retracement zone of 119.64-120.16. Rejection within this zone would warn of another leg lower towards 115.44 or 113.85.

USD/CAD
Weekly



-USDCAD has propelled higher and is probably headed into upper parallels. Levels of interest on the upside are 1.1666 (Fibonacci) and 1.1723 (June 2009 high).

USD/CHF
Weekly



-“USDCHF has traded into median line support and former congestion (.9300-.9430). Start looking higher again. .9580 is resistance within the range and .9400/30 is support. A target level in the event of a new high is .9750.”
-“USDCHF exceeded its .9750 objective but drastic divergence with RSI on the daily along with a possible wedge formation from .9359 warn of a vulnerable market and topping process.”



More...

Talking Points

• Crude sentiment at contrarian extremes
• Key week ahead for EUR/USD
• AUD/USD touches a new low for the year

Price & Time Analysis: EUR/USD

• EUR/USD has moved steadily higher since finding support early last week ahead of the 15th square root relationship of the year’s high in the 1.2250 area
• A daily close over the 2nd square root relationship of the year’s low at 1.2470 will turn us positive on the exchange rate
• Weakness below 1.2360 is needed to reinstill downside momentum in the euro
• A very minor turn window is eyed on tomorrow/Wednesday

EUR/USD Strategy: Flat. Aggressive traders could look to buy on weakness into Wednesday.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
EUR/USD	1.2360	1.2415	1.2425	1.2470	1.2495

Price & Time Analysis: AUD/USD

• AUD/USD fell to a new low for the year on Monday before rebounding again off a median line related to the 2013 high
• Our near-term trend bias is lower in the Aussie while below .8405
• A close under .8205 is needed to set off a new leg lower in the rate
• A turn window of some importance is eyed right here
• A close above .8405 would turn us positive on AUD/USD

AUD/USD Strategy: Like holding only a reduced short position until after this turn window.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
AUD/USD	.8125	.8205	.8225	.8280	.8405

More...

Talking Points

• SPX testing key downside threshold
• EUR/USD overcomes key Gann resistance
• USD/JPY cracks important downside pivot

Price & Time Analysis: EUR/USD

• EUR/USD has moved steadily higher since finding support early last week ahead of the 15th square root relationship of the year’s high in the 1.2250 area
• A daily close over the 2nd square root relationship of the year’s low at 1.2470 will turn us positive on the exchange rate
• Weakness below 1.2430 is needed to reinstill downside momentum in the rate
• A very minor turn window is eyed early next week

EUR/USD Strategy: Square. Will look to buy on weakness if spot close over 1.2470.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
EUR/USD	1.2430	1.2470	1.2250	1.2585	1.2605

Price & Time Analysis: USD/JPY

• USD/JPY broke below the 4th square root relationship of the year’s high earlier this morning and aggressive weakness has followed
• Our near-term trend bias is lower USD/JPY while below 117.40
• Important support is eyed at 115.45 and 115.00 and weakness below these level is needed to prompt a much more serious unwind
• A minor turn window is seen around the end of the week
• A close above 117.40 would turn us positive on the exchange rate

USD/JPY Strategy: Like the short side while under 117.40

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
USD/JPY	115.00	115.45	116.20	116.80	117.40

Focus Chart of the Day: S&P 500



As chaotic as the S&P 500 has been over the past few months it has also been rather symmetrical. For instance, the low in October at 1820 came right at the 161.8% projection of the early September decline. The high of the year came right at a convergence of the 6th square root relationship of the October low and the 127% extension of the September/October decline. On Tuesday the index closed right on the 2nd square root relationship of the year’s high at 1988. Those who read Price & Time with any regularity will know that we pay a lot of attention to 2nd square root relationships as they are a good barometer for determining if a market is about to undergo a more severe correction. In early October the 2nd square root relationship of the year’s then high in the S&P 500 was 1932 (black line circled in blue on chart). The market probed this level for over a week before finally closing below it on October 9th. A 100 point move lower followed. We bring all this up to illustrate the fact that we think the S&P 500 is currently at a critical level. A successful hold of 1988 could easily prompt a ‘run for the roses’ into year-end. Theoretically there is still time. A close under 1988, on the other hand, will turn the technical picture convincingly negative and risk a potentially serious decline over the next few weeks.


More...

Talking Points:

• US Dollar Reversal Risk Seen on Test of December High
• S&P 500 May Be in the Process of Forming a Double Top
• Crude Oil Rallies Most in 2 Months, Gold Prices Stalling

US DOLLAR TECHNICAL ANALYSIS – Prices arestruggling to breach December’s high, with negative RSI divergence warning a double top may be forming. A daily close below the 14.6% Fibonacci retracementat 11489 exposes the 23.6% level at 11379. Alternatively, a reversal above the December 8 high at 11522opens the door for a challenge of the 38.2% Fib expansion at 11577.



S&P 500 TECHNICAL ANALYSIS – Prices are testing resistance in the 2067.90-79.60 area marked by the 38.2% Fibonacci expansion and the December 5 high. A daily close above this barrier exposes the 50% level at 2098.60. Negative RSI divergence warns of ebbing upside momentum however and hints a reversal lower may be in the cards. A move below the 23.6% Fib at 2029.80 targets the 14.6% expansion at 2006.40.



GOLD TECHNICAL ANALYSIS – Prices are struggling with downside follow-through after breaking support at the bottom of a rising channel set from early November. A break below the 23.6% Fibonacci expansion at 1187.39 exposes the 38.2% level at 1156.00. Alternatively, a turn above the 1205.26-1206.74 area marked by channel floor support-turned-resistance and the 14.6% Fib targets the December 9 high at 1238.13.



CRUDE OIL TECHNICAL ANALYSIS – Prices put in the largest daily advance in two months, reclaiming a foothold above the 62.00 figure. A break above the 23.6% Fibonacci retracement at 63.94 exposes the 38.2% level at 67.31. Alternatively, a reversal below the 14.6% Fib at 61.86 targets the December 16 low at 58.49.




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


More...

Talking Points

• Important Gann cluster overhead in USD/JPY
• Range break needed in GBP/USD
• Sentiment a drag on further euro weakness?

Price & Time Analysis: USD/JPY

• USD/JPY has moved steadily higher over the past few days since finding support from just above the 38% retracement of the October low
• Our near-term trend bias is higher in USD/JPY while above 117.40
• A confluence of Gann and Fibonacci levels around 120.50 suggests this should be the next important action/reaction area
• An important turn window is eyed tomorrow
• A close back under 117.40 would turn us negative on the exchange rate

USD/JPY Strategy: Look to buy on dips while above 117.40.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
USD/JPY	117.40	118.50	119.75	120.10	120.50

Price & Time Analysis: GBP/USD

• GBP/USDregistered a new low for the year last week, but has since rallied back into the middle of the month-long range
• Our near-term trend bias is negative while below 1.5790
• A close under 1.5540 is needed to confirm the start of a more important leg lower
• A minor turn window is eyed on Tuesday
• A close over 1.5790 would turn us posiitve on Cable

GBP/USD Strategy: Like selling into strength while below 1.5790.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
GBP/USD	1.5370	1.5540	1.5610	1.5675	1.5790

Focus Chart of the Day: EUR/USD



EUR/USD has managed to buck the historically positive seasonality of late December with aggressive weakness over the past few days taking the exchange rate to new lows for the year. The resumption of the broader trend has come earlier than we were expecting and has caught us a bit by surprise. We are now open to the possibility of a cyclical inversion early next year. Attention now turns to the next major downside pivot around 1.2135 as this marks the 50% retracement of the all-time low and the all-time high in the euro. Traction under this level in the weeks ahead would signal the start of a more important run lower in the exchange rate. A potential positive for the euro is the sentiment picture which saw the DSI fall to just 6% bulls on Friday. Extreme negative sentiment has accompanied every break to new lows over the past few months and warns too many traders are looking for the same thing. However, the next cyclical turn window of significance is not seen until closer to year-end.


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


More...

Talking Points:

• US Dollar Hits Five-Year High But Reversal Risk Remains
• S&P 500 Stalling at December Top, May Turn Downward
• Crude Oil Range-Bound Above $58, Gold Selloff Resumes

US DOLLAR TECHNICAL ANALYSIS – Prices edged past December’s swing top to establish a new five-year high. Near-term resistance is at 11577, the 38.2% Fibonacci expansion, with a break above that on a daily closing basis exposing the 50% level at 11648. Negative RSI divergence warns of ebbing upside momentum and hints a downturn may be brewing ahead. A push below the 11489-522 area marked by the December 8 top and the 23.6% Fib clears the way for a test of the 14.6% expansion at 11434.



S&P 500 TECHNICAL ANALYSIS – Prices are testing resistance in the 2067.90-79.60 area marked by the 38.2% Fibonacci expansion and the December 5 high. A daily close above this barrier exposes the 50% level at 2098.60. Negative RSI divergence warns of ebbing upside momentum however and hints a reversal lower may be in the cards. A move below the 23.6% Fib at 2029.80 targets the 14.6% expansion at 2006.40.



GOLD TECHNICAL ANALYSIS – Prices resumed downward momentum, with sellers now aiming to challenge the 38.2% Fibonacci expansion at 1156.00. A break below this boundary on a daily closing basis exposes the 50% level at 1130.64. Alternatively, a reversal above the 23.6% Fib at 1187.39 targets the 14.6% expansion at 1206.74.



CRUDE OIL TECHNICAL ANALYSIS – Prices are in consolidation mode above the $58.00/barrel figure. A break below the 23.6% Fibonacci expansion at 58.20 exposes the 38.2% level at 54.83. Alternatively, a bounce above the 23.6% Fib retracement at 63.94 targets the 38.2% threshold at 67.31.



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


More...

Talking Points:

• US Dollar May Reverse Lower as Upside Momentum Fades
• S&P 500 Sets New Yearly High But Reversal May Be Ahead
• Gold Stalls After Breakdown, Crude Oil in Digestion Mode

US DOLLAR TECHNICAL ANALYSIS – Prices pushed higher for a third consecutive day but negative RSI divergence casts doubt on follow-through. A daily close above the 38.2% Fibonacci expansionat 11577 exposes the 50% level at 11648. Alternatively, a reversal below the 11489-522 area marked by the December 8 top and the 23.6% Fib opens the door for a challenge of the 14.6% expansion at 11434.



S&P 500 TECHNICAL ANALYSIS – Prices edged above the December 5 high at 2079.60, exposing the 50% Fibonacci expansion at 2098.60. A daily close above this barrier exposes the 61.8% level at 2129.40. Negative RSI divergence warns of ebbing upside momentum and hints a turn lower may be looming. A turn back below 2079.60 sees initially support at 2067.90, the 38.2% Fib.

D

GOLD TECHNICAL ANALYSIS – Prices resumed downward momentum, with sellers now aiming to challenge the 38.2% Fibonacci expansion at 1156.00. A break below this boundary on a daily closing basis exposes the 50% level at 1130.64. Alternatively, a reversal above the 23.6% Fib at 1187.39 targets the 14.6% expansion at 1206.74.



CRUDE OIL TECHNICAL ANALYSIS – Prices are in consolidation mode above the $58.00/barrel figure. A break below the 23.6% Fibonacci expansion at 58.20 exposes the 38.2% level at 54.83. Alternatively, a bounce above the 23.6% Fib retracement at 63.94 targets the 38.2% threshold at 67.31.




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


More...

Talking Points

• EUR/USD trades at lowest level in two years
• USD/JPY testing key Gann resistance
• SPX cycles point to weakness in Q1

Price & Time Analysis: EUR/USD

• EUR/USD fell to its lowest level since August of 2012 on Tuesday
• Our near-term trend bias is lower in EUR/USD while below 1.2360
• The 50% retracement of the all-time low and the all-time high around 1.2135 is the next important pivot for the exchange rate
• The next turn window of importance is seen around the end of the month
• A close above 1.2360 would turn us positive on the euro

EUR/USD Strategy: Like the short side while below 1.2360

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
EUR/USD	1.2135	1.2165	1.2190	1.2260	1.2360

Price & Time Analysis: USD/JPY

• USD/JPY traded at its highest level in over two weeks on Tuesday before encountering resistance around the 1st square root relationship of the year’s high in the 120.70 area
• Our near-term trend bias is positive while over 119.50
• Traction over 120.70 is needed to prompt a push towards the yearly high
• An important turn window is seen this month
• A close under 119.50 would turn us negative on the exchange rate

USD/JPY Strategy: Like the long side while over 119.50

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
USD/JPY	119.65	120.25	120.40	120.70	121.85

Focus Chart of the Day: S&P 500



The S&P 500 finally managed to break convincingly above the key resistance at 2075/80 (127% extension of the September/October decline & 6th square root relationship of the October low) on Tuesday. The end of December is historically one of the strongest seasonal periods of the year for the US equity market and it is very difficult seeing the index letting up much before year-end. The first quarter of next year could be a different story, however, as a slew of important cyclical relationships during this time suggest the index will probably surprise and come under a bit of pressure. The first important ‘turn window’ of the year is seen around the 2nd week of January. Happy Holidays!


More...

Talking Points:

• US Dollar, S&P 500 May Turn Lower from Multi-Year Highs
• Crude Oil Remain Locked in Range Above $58/barrel Figure
• Gold Prices Try to Mount Recovery, Eyeing $1200/oz Level

US DOLLAR TECHNICAL ANALYSIS – Prices flat-lined after hitting a five-year high, with negative RSI divergence warning a downturn may be ahead. Near-term resistance is at 11577, the 38.2% Fibonacci expansion, with a break above that on a daily closing basis exposing the 50% level at 11648. Alternatively, a turn below the 11489-522 area marked by the December 8 top and the 23.6% Fib clears the way for a test of the 14.6% expansion at 11434.




S&P 500 TECHNICAL ANALYSIS – Prices edged above the December 5 high at 2079.60, exposing the 50% Fibonacci expansion at 2098.60. A daily close above this barrier exposes the 61.8% level at 2129.40. Negative RSI divergence warns of ebbing upside momentum and hints a turn lower may be looming. A turn back below 2079.60 sees initially support at 2067.90, the 38.2% Fib.



GOLD TECHNICAL ANALYSIS – Prices recoiled upward to test resistance at 1196.08, the 23.6% Fibonacci expansion, with a break above that on a daily closing basis exposing the 38.2% level at 1211.85. Alternatively, a move below the 14.6% Fib at 1186.36 targets the December 22 low at 1170.59.



CRUDE OIL TECHNICAL ANALYSIS – Prices are in consolidation mode above the $58.00/barrel figure. A break below the 23.6% Fibonacci expansion at 58.20 exposes the 38.2% level at 54.83. Alternatively, a bounce above the 23.6% Fib retracement at 63.94 targets the 38.2% threshold at 67.31.




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


More...