Weekly Trend Duration and Support/Resistance

 TrendWCURR1 STD2 STD3 STDATR(13w)S3S2S1R1R2R3
EURUSDUp4612182.73%1.33281.34471.35691.38171.39411.4066
GBPUSDUp4612192.01%1.59321.60371.61441.63611.64701.6579
AUDUSDUp2713202.59%0.98870.99711.00561.02311.03181.0406
NZDUSDUp2917263.08%0.73840.74580.75340.76890.77670.7845
USDJPYUp249131.93%81.6082.1182.6483.7184.2484.78
USDCADDown1449131.63%0.97060.97580.98110.99180.99711.0025
USDCHFUp1714212.71%0.91950.92760.93590.95290.96150.9700
             
EURJPYUp549132.44%111.15112.04112.94114.79115.71116.64
EURGBPUp1511162.14%0.82460.83040.83620.84820.85420.8602

-TrendW is weekly trend and CURR denotes how long the current trend has been underway in weeks. 1,2,3 STD are 1st,2nd, and 3rd standard deviations of the duration of trends measured over the last 150 weeks (3 years).

-ATR(13w) is 13 week average true range expressed as a percentage

-On the charts below, magenta bars/candles indicate key reversals (classic definition) from a 20 day high/low and a range for the week that is at least as large as 20 day ATR

The price charts contain RSI signals (comparison of RSI and price extremes) over 2 different periods, 26 and 52 weeks

Euro / US Dollar

Weekly

021811FXTW_body_eurusd.png,

Prepared by Jamie Saettele

Jamie - The strong advance this week puts the bearish trend in question. The decline from 13861 is left as 2 equal waves, which is corrective. Multiple patterns could be unfolding from that level (triangle, flat or less likely at this point...an impulse). Trading above 13744 would put 13861 and then 14000 in focus.

Joel - The market looks to be in the process of seeking out a fresh lower top below 1.3745 ahead of the next downside extension towards the measured move objective off of a head & shoulders top formation which comes in by 1.3300. Look for confirmation of a fresh lower top on a break back below 1.3425. As such, we like the idea of fading rallies towards 1.3700, with only a break back above 1.3745 negating short-term outlook and giving reason for pause.

British Pound / US Dollar

Weekly

021811FXTW_body_gbpusd.png,

Prepared by Jamie Saettele

Jamie - The GBPUSD opened at its low and closed near its high last week. 16300 seems a foregone conclusion at this point, with resistance then coming in at 16457. Keep the long term pattern in mind, which I believe is a triangle from the January 2009 low. The pattern should result in weakness towards 14780 (wave D) in the months ahead. The lower triangle line intersects with 14780 in April.

Joel - The market largely remains locked in some consolidation after stalling out by key resistance at 1.6300 several days back. From here, it is difficult to establish a clear directional bias and we will need to see a sustained break above 1.6300 or back below 1.5960 for additional clarity. In the interim, we remain sidelined.

Australian Dollar / US Dollar

Weekly

021811FXTW_body_audusd.png,

Prepared by Jamie Saettele

Jamie - With a potentially completed Elliott wave pattern (5 waves) from the 2008 low (6000), the risk of a sharp reversal and decline does remain. However, bears need a break below 9803 in order to confirm such a reversal and a move above 10256 would shift focus higher following a bullish triangle break towards 10500 or even 11000.

Joel - Although setbacks have stalled out for now ahead of 0.9800, we continue to favor risks for additional downside and like the idea of selling into rallies. Ultimately, we see the market in the process of carving out a major top and any rallies from here should be well capped below 1.0150 on a close basis. Only back above 1.0200 gives reason for concern, while below 0.9945 should accelerate to 0.9800 and below.

New Zealand Dollar / US Dollar

Weekly

021811FXTW_body_nzdusd.png,

Prepared by Jamie Saettele

Jamie - After trading to a fresh 2011 low, the NZDUSD rebounded to close at its 13 week average. A drop below 7342 is needed in order to confirm that the NZDUSD completed wave b of a flat in late 2010. Until then, bullish potential does remain with the setback from 7975 serving as consolidation.

Joel - Rallies continue to be very well capped above 0.7800 and the market has once again stalled out above the figure in favor of yet another bearish reversal. From here, we see risks for additional declines towards 0.7300 over the coming sessions, with any intraday rallies expected to be well capped ahead of 0.7700. A daily close below 0.7500 should accelerate declines.

US Dollar / Japanese Yen

Weekly

021811FXTW_body_usdjpy.png,

Prepared by Jamie Saettele

Jamie - One can view the USDJPY action since November as consolidation prior to a continuation of weakness or a basing pattern that will lead to a break higher. Last week's strong rally clarifies the picture as I had pegged 8321 as the bullish pivot. The break above that level favors the idea that the sideways trade since the November low is a bullish base rather than a triangle. Focus is on 8450 and 8110 is critical to the bullish bias. A 26 week bearish RSI signal was triggered last week so caution is warranted.

Joel - The market continues to remain extremely well bid, with the latest surge back above 83.00 really encouraging longer-term recovery prospects and opening the door for a potential break of key topside resistance by 84.50 over the coming days. Longer-term cyclical studies certainly suggest that the market could be poised for a major bullish reversal and we would look for a break and weekly close back above 84.50 to help confirm outlook. Any dips from here should be well supported ahead of 82.50, while only a break back below 82.00 would concern.

US Dollar / Canadian Dollar

Weekly

021811FXTW_body_usdcad.png,

Prepared by Jamie Saettele

Jamie - The 13 week average continues to hold and the downside must be respected. Focus is on the downward sloping trendline drawn off of the August and October lows as well as 9710 (February 2008 low). Last week's candle did close as a gravestone doji, which indicates indecision. 10057 defines the trend.

Joel - Daily studies are starting to look a little stretched, and this in conjunction with longer-term cyclical studies which warn of a major base, leave us looking for opportunities to buy rather then selling into the downtrend. The 0.9800 figure seems to be offering itself as a formidable support zone for now, and any dips back towards or slightly below the figure over the coming sessions are viewed as an excellent opportunity to establish a very playable counter-trend long position. Ultimately, only a daily close back below 0.9750 would delay outlook and give reason for pause.

US Dollar / Swiss Franc

Weekly

021811FXTW_body_usdchf.png,

Prepared by Jamie Saettele

Jamie - I maintain that a major low was put in place in the final week of 2010. The low, right at 9300, was just 50 pips below where the decline from 11730 would equal the decline from 12299. What's more, the low occurred at a support line and was accompanied with RSI divergence. Based on long term wave structure, this rally from 9300 is probably a C wave and should be sharp. Trading above 9784 would bolster the bullish outlook and shift focus to the December high at 10065. A drop under 9300 would negate the bullish pattern and bias.

Joel - The market has been in the process of pulling back after stalling out ahead of key short-term resistance by 0.9785 in the previous week. Still we see any additional declines well propped above 0.9425 (minor 78.6% fib retrace) on a close basis and look for the formation of a fresh higher low ahead of the next major upside extension back through 0.9785 and towards more critical resistance by 1.0070 further up. Only a close below 0.9400 will give reason for concern.

Euro / Japanese Yen

Weekly

021811FXTW_body_eurjpy.png,

Prepared by Jamie Saettele

Jamie - The EURJPY path is not especially clear. A diamond pattern appears to be forming since the June 2010 low and a break above 11500, which has capped gains since July 2010, would shift focus to the February 2010 low at 11964. With the 20 day average holding as support this month, a bullish outcome is looking more and more likely. The 52 week average is potential resistance at 11417 and both 26 and 52 week bearish RSI signals were registered this week.

Joel - The market remains very well supported on dips with the overall price action defined as consolidative. However, given where the market trades historically, we continue to like the idea of being buyers down by current levels in favor of a major bullish reversal over the coming months. For now, key resistance comes in by the multi-week consolidation highs at 115.70, and a break and close back above this level will be required to officially force a shift in the structure. In the interim, buying dips towards 110.00 is favored.

Euro / British Pound

Weekly

021811FXTW_body_eurgbp.png,

Prepared by Jamie Saettele

Jamie - A long term complex 4th wave correction remains underway in the EURGBP. Expectations are for continued weakness towards a channel line that intersects with the former 4th wave extreme at 7692 at the end of April. Price remains below important moving averages (20 and 50 day). A bearish stance is warranted against 8672.

Joel - The market continues to adhere to some major falling trend-line resistance, with the latest topside failure off of the channel top opening an acceleration of declines back below 0.8500. From here the risks are for additional declines over the medium-term with sights set on a move to fresh yearly lows by critical psychological barriers at 0.8000. Ultimately, only back above 0.8700 would negate and give reason for concern.

Jamie Saettele publishes Daily Technicals every weekday morning, COT analysis (published Monday), technical analysis of currency crosseson Monday, Wednesday, and Friday (Euro and Yen crosses), and intraday trading strategy as market action dictates at the DailyFX Forex Stream. He is the author of Sentiment in the Forex Market. Past presentations on technical analysis are available to view. Send requests to receive his reports via email to jsaettele@dailyfx.com.

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