EUR/USD ââ,¬â€œ The euro rallied for the third time in as many days, stalling just below the 1.2400 figure.  Short term prospects favor consolidation / pullback as hourly oscillators show negative divergence on the last two highs at 1.2368 and 1.2393.  Since the 1.3667 top in December 2004, there have been 3 major euro counter rallies with this one being the fourth.  The past three were rallies of 613, 724, and 683 pips each.  Placing the low at 1.1825 and assuming anywhere from a 600 to 700 pips rally, we can predict a possible top within the 1.2425-1.2525 zone, which is fortified by the 8/12/05 and 9/2/05 highs of 1.2485 and 1.2588 and the intersection of time and a line from the 1.3667 high and 3/14 high at 1.3477.  Still, this rally comes off of the completion of an inverse head and shoulders, suggesting that the bigger long term moves are to the upside.

USD/JPY ââ,¬â€œ The greenback put up a fight against the Yen, holding its long term supporting trendline originating in May 2005.  As a result, the consolidation that began in early February persists and the possibility of an upside break from the ascending triangle remains.  Key levels remain the long term supporting trendline and the flat resisting line from the ascending triangle near the 4/11 high of 118.87.  The ability of the pair to hold the supporting trendline certainly lends a bullish appearance to the chart.  Conditions remain range bound until a daily close below/above one of these levels.

GBP/USD ââ,¬â€œ Cableââ,¬â"¢s rally is so strong and occurs after so little volatility in the pair, that todayââ,¬â"¢s candle spent nearly its entire day above the upper Bollinger band.  In fact, CCI indicates that there have been just 3 times in the last 10 years on a daily basis that volatility has shifted this quickly.  In June 1997, CCI spiked above 300 and subsequently reversed, trading from 1.7000 to 1.5600 in a little under a month.  In June 2002, CCI spiked above 300 but continued upward from 1.4700 to 1.5800 in a little over a month.  If history tells us anything, then expect a big move in either direction in the next month.  What bulls will find disconcerting is that a failure to break above todayââ,¬â"¢s high would result in a double top, one of the most powerful patterns in technical analysis, from the 1/25 and 4/19 (yesterday) highs at 1.7934.

USD/CHF ââ,¬â€œ USD/CHF has retraced some of its losses in Tokyo trading this evening, trading back above 1.2700.  Originally breaking a supporting trendline from September 2005 two days ago, the pair tested the same line as resistance and was rejected, suggesting that lower prices lay ahead.  The pair did make lower prices but also made a short term double bottom and positive divergence with oscillators on the hourly.  Now sloping up, those oscillators suggest higher prices in the short term.  The former supporting trendline turned resistance sits at 1.2760 with a break exposing the 4/6 low at 1.2804.  A daily close below yesterdayââ,¬â"¢s 1.2648 low is required in order to aggressively proclaim further weakness.

USD/CAD ââ,¬â€œ USD/CAD continued its descent, breaking below the 1.1400 figure.  With the pair holding below its 1/31 low of 1.1373, the picture is still bearish with no obvious support until the 3/2 low at 1.1297.   The correction from todayââ,¬â"¢s 1.1349 low has been rather pathetic, suggesting a lack of willing buyers.  As mentioned, 1.1297 remains the target / support with a break exposing the November 1991 low at 1.1189.

AUD/USD ââ,¬â€œ AUD/USD continued to gain and closed right at its 200 day SMA (1.7465).  The pair has immediately traded off of the imposing SMA, correcting a bit to .7444.  The proximity of the 200 day SMA connotes that the risk to the pair is greater to the downside than the upside.  Additional resistance comes in at the 61.8% fibo of .7761-.7013 at .7476, just below yesterdayââ,¬â"¢s .7481 high.  Weakness in AUD/USD confronts support at yesterdayââ,¬â"¢s 1.7410 low with a break below targeting the 100 day SMA at 1.7384.  In the event that buyers can push through the ceiling made by the 3/2, 3/3, and 4/19 highs at .7481/85, the pair targets the confluence of the 1/31, 2/1 highs / 76.4% fibo of .7761-.7013 at .7585.

NZD/USD ââ,¬â€œ Kiwi gained against the US dollar for the seventh time in the last eight days, stopping at the 38.2% fibo of .6916-.5991 at .6345.  The correction has been small though with the pair falling just 25 pips off of its recent .6357 high.  The weakening oscillators after negative divergence on the hourly gives scope to weakness to the 23.6% fibo of .6060-.6357 to .6287 with a break targeting the 4/13 high at .6257.  A continuation of the uptrend sees a possible test of the 50 day SMA at .6383.

Sam Shenker is a Technical Currency Analyst for FXCM.