Euro Fails to Extend Its Rally

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By Jamie Saettele | Published 04/10/2006 | Currency | Unrated

Euro Fails to Extend Its Rally

EUR/USD â�,�“ EUR/USD failed to extend its rally just shy of the 38.2% fibo of 1.3478-1.1640 at 1.2337. Buyers brought the decline to a halt after a brief piercing of the 20 day SMA at 1.2104. The pair remains in a medium term uptrend dating to its 2/27 low at 1.1825 with support just below the current price at the intersection of the 50% fibo of 1.1825-1.2331 / supporting trendline from early March at 1.2077. A break below gives bears ammunition for a test of the 61.8% fibo of 1.1825-1.12331 / 50 day SMA at 1.2016/19 with further weakness exposing the 3/24 low of 1.1951. Buyers face once again the 3/17 high at 1.2207 with a break higher setting the stage for a retest of last Thursdayâ�,��"�s 1.2331 high.

USD/JPY â�,�“ USD/JPY continues to trade sideways primarily between 116.50 and 118.50. Short term oscillators are valuable with the tight range in effect. A daily close above the upper end of the triangle that began formation in December / 4/3 high at 118.79 is required to take a more aggressive upside bias. Fridayâ�,��"�s 117.41 reaction low serves as initial support with a break exposing the 3/9 and 3/30 lows at 117.10. If buyers can rally past the 118.79 figure, then the 76.4% fibo of 121.37-113.41 / 2/3 high comes into play at 119.38/48 with an eventual test of the 12/5 high at 121.37 in the works.

GBP/USD â�,�“ The British Pound has retraced nearly 61.8% of its rapid ascent from 1.7149 to 1.7616. Although finding itself in the middle of its wide 1.7250-1.7620 range, hourly oscillators lend an air of bullishness with a recent positive MACD crossover and RSI rising from oversold levels. Chart congestion is heavy until after 1.7620 suggesting choppy trade going forward. Notable on intraday charts is 1.7480, as defined by the 3/30 reaction high and 4/5 reaction low. 3/28 and 4/7 pivot highs indicate sellers near or at 1.7535 with a break exposing the 38.2% fibo of 1.8501-1.7043 at 1.7597. A daily close above 1.7600 is required to bolster bullish sentiment. A continuation of last weekâ�,��"�s late selling sees a test of the 61.8% fibo of the recent 1.7249-1.7616 upward move at 1.7390 with a break exposing the 76.4% of 1.7335. A daily close below the 3/13 low of 1.7229 suggests a break to the downside.

USD/CHF â�,�“ USD/CHF also comes off of a recently failed breakout attempt after testing the 61.8% fibo of 1.2550-1.3238 at 1.2814. Trading below its 200 day SMA last Thursday, the pair now finds itself at the confluence of the 10, 20, and 100 day SMA (1.2987-1.2998). 1.3043 represents the 61.8% of 1.3192-1.2803 and is immediate resistance with a push above targeting the psychological 1.3100 - which is not only the 76.4% fibo of the just mentioned bear wave but also the upper end of the downward sloping channel that began in late February. The 200 day SMA at 1.2900 serves as support with a break opening up another test of the supporting trendline from early March just above 1.2800.

USD/CAD â�,�“ The Canadian Dollar is strong with USD/CAD back below 1.1500. Positive divergence with stochastics and RSI on the hourly suggests at the least a temporary reprieve of recent weakness. Scope remains for a possible reversal to the upside as the pair trades at its lower Bollinger band / 61.8% fibo of 1.1297-1.1771 at 1.1479. Any bounce from Fridayâ�,��"�s 1.1437 low contends with the 23.6% fibo of 1.1771-1.1437 at 1.1515 with additional strength targeting the 3/31 reaction low at 1.1574. However, the weekly outside reversal candlestick indicates lower prices ahead with the mentioned 1.1437 low a first target followed by the 1/31 low at 1.1373. A daily close below the 3/2 1.1297 low gives scope to a resumption of the longer term downtrend.

AUD/USD â�,�“Australian Dollar bulls were reined in a bit on Friday as the pair fell for just the second time in eight days. The current consolidation leaves the hourly chart in much better health as oscillators are no longer overbought and the weekly morning star pattern points towards higher prices as well. A challenge of yesterdayâ�,��"�s .7342 high is the first hurdle with a break targeting the 76.4% fibo of .7587-.7013 at .7449. Additional counter moves (to the downside) see support at the convergence of the 38.2% fibo of .7013-.7342 / 20 SMA at 1.7208/16. Buyers will likely protect the 61.8% of the recent bull wave from .7013 at .7140 if called upon.

NZD/USD â�,�“ Kiwi continues to diverge from the AUD and now trades at the .6100 handle. The trend is down but the rise of oscillators above oversold levels on the daily give scope to a bounce towards near term resistance. Sellers will try to stem any advance at the 20 day SMA / 4/6 high at .6185/87 with gains beyond targeting the 23.6% of the .7000-.5994 bear wave from 1/16 at .6231. A break below the .5994 low exposes the 5/18/04 low of .5909 followed by the 50% fibo of the multi-year .3970-.7460 bull wave at .5715.

Sam Shenker is a Technical Currency Analyst for FXCM.

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