Dollar Enters Panic StageTue, 22 Sep 2009 10:37:34 -0400By Jamie Saettele, Senior Currency Strategist firstname.lastname@example.org
1.4850, which is the 100% extension of the 1.2327- 1.4723 rally, has been one of the levels that we’ve been focusing on as a possible turning point. Price is close to there now so watch carefully. There are also several resistance lines (up-sloping) that are at and just above current price.
Euro / US Dollar
1.4850, which is the 100% extension of the 1.2327- 1.4723 rally, has been one of the levels that we’ve been focusing on as a possible turning point. Price is close to there now so watch carefully. There are also several resistance lines (up-sloping) that are at and just above current price. While the confluence of these levels (as well as RSI divergence on multiple time frames) warns of the potential for a top, trading from the short side remains difficult until a bearish price pattern emerges.
British Pound / US Dollar
Focus remains on the larger head and shoulders pattern that has been unfolding since early June. The neckline has held (as warned yesterday through a technical alert at DailyFX), and Cable has retraced half of its decline from 1.6573 thus far. A larger bearish bias is valid against there but confidence in a large downside move is low until a daily close below neckline support. 1.6400 (former support) may provide resistance.
Australian Dollar / US Dollar
“The AUDUSD continues to work higher towards the 78.6% of the decline from .9856-.6007, which is .9032. This level intersects with a potential resistance line on September 25.” That would be Friday.
New Zealand Dollar / US Dollar
Kiwi has gone vertical in what may be a blow-off top. The pair is at its highest level since August 2008 and levels to keep an eye on are .7250 (Fibonacci extension which is discussed in FX Technical Weekly), .7382 (January 2008 low) and .7444 (June 2008 low).
US Dollar / Japanese Yen
Keep the long term outlook in perspective - “a 4th triangle ended in 2007 above 124.00 therefore the decline from that level is viewed as a 5th wave that will not be considered complete until price drops to an all-time low (below the 1995 low near 80).” After breaking above trendline resistance and trading to 92.50, the USDJPY has retraced a significant portion of its recent rally and is now near the topside of the former resistance line. That line is potential support but the decline is impulsive. Given that the larger trend is down, it is best to sell rallies when presented with bearish evidence. 91.60 is short term resistance.
US Dollar / Canadian Dollar
Barring a break above the resistance line, the USDCAD is vulnerable to a drop towards 1.0330 - which has been both support and resistance over the last several years. This level is also the 61.8% extension of the 1.3068-1.0782 decline (from 1.1730). Thus far, the 61.8% retracement of the rally from .9055 has held. The circled area could be a triangle, in which event the immediate move is higher towards 1.1100.
US Dollar / Swiss Franc
“The print below 1.0367 (December 2008 low) satisfies the minimum requirement for wave v of C. Divergence with momentum on nearly all time frames warns of a sharp turn against the Franc.” It would take a rally through 1.0526/channel resistance in order to proclaim with confidence that a low is in place. Until then, focus is on 1.0037.
Jamie Saettele publishes Daily Technicals every weekday morning, COT analysis (published Monday mornings), technical analysis of currency crosses on Monday, Wednesday, and Friday (Euro and Yen crosses), and intraday trading strategy as market action dictates. He is the author of Sentiment in the Forex Market. Follow his intraday market commentary at DailyFX Forex Stream.
Contact Jamie at email@example.com if you would like to receive his reports via email.