EUR/USD ââ,¬â€œ The long term inverse head and shoulders reversal pattern has played out to perfection as the pair traded to its 50% fibo of 1.3478-1.1640 at 1.2558.  The bullish signals touted over the past few weeks such as the change in slope of the 40 week SMA on 4/14 and the 20 day SMA crossing above the 200 day SMA, have proved correct.  ADX is a hair away from indicating trend (> 30) and is at 29.68.  While the indicator will typically give a signal roughly halfway through a move, a rise above 30 signals a high probability chance of a continuation.

USD/JPY - USD/JPY broke the 114.23 low on 4/24 but was rejected at the 101.57-121.40 at 113.88.  Particularly bearish is the fact that USD/JPY has crosses below its 40 week SMA.  The last cross of the 40 week SMA was during the week ended 5/13/04 when the pair crossed above the SMA at 106.16.  Support from the 113.41 low on 1/12 must hold if the pair is to recoup a portion of recent losses.  A break below exposes a July 2004 high at 112.50.  Resistance comes in at the 23.6% fibo of 118.82-113.81 at 115.00.

GBP/USD ââ,¬â€œ Cable took off yesterday and broke the 1.7934 (1/25 and 4/19 highs) double top, closing above 1.8000 for the first time since 9/19/05.  The pair currently sits just above the 38.2%% fibo of 1.9544-1.7042 at 1.8000.  Also, the pair broke the upper end of its consolidating channel that began in October 2005.  Slight divergence with RSI on the daily and massive negative divergence with RSI on the dealer chart gives scope to a possible return to within the channel below 1.8000.  Support stems from the 4/25 high at 1.7941 followed by the 23.6% fibo of 1.7248-1.8043 at 1.7857.  A resumption of the strong move upward sees a test of a downward sloping trendline from the December 2004 highs near 1.8140.  ADX is now greater than 30 and thus indicates a trending market but historically, this indicator has crosses above 30 at or near the very end of the trend.

USD/CHF ââ,¬â€œ USD/CHF continues with the US dollar weakness theme.  The pair pierced its prior 2006 low of 1.2553 (1/24) to make a new 2006 low at 1.2548.  The pairââ,¬â"¢s 20 and 200 day SMAââ,¬â"¢s lag those of the EUR/USD SMAââ,¬â"¢s.  The 20 day crossed below the 200 day on USD/CHF two days ago and this occurred on EUR/USD nearly two weeks ago.  Still, the signal is bearish and should be viewed as such.  Like the other majors, USD/CHF shows divergence with RSI and other oscillators on the dealer chart, which suggests a possible contra move.  Resistance comes in at yesterdayââ,¬â"¢s low of 1.2576 along with the 4/19 low at 1.2648.  If the pair continues to ride along its lower Bollinger band on the daily, then look for support at the 38.2% of the 1.1283-1.3286 decline at 1.2522.  A break lower targets the 76.4% fibo of 1.2235-1.3286 at 1.2482.

USD/CAD ââ,¬â€œ The Canadian dollar continues to impress and held below its previous low of 1.1297 to end the day at 1.1214; its lowest close in 15 years!  There is little to warrant a bullish argument after the break of the 15 year low at 1.1297, especially considering that the lower low yesterday is joined by lower oscillator values and thus momentum confirmation.  This break lower gives scope to a test of the November 1991 low at 1.1189 with additional weakness targeting the 161.8% of 1.1708-1.2741 at 1.1070.  The 3/2 low of 1.1297 is now resistance above with the 10 day SMA at 1.1370 also resistance.  Hourly oscillators are rising from oversold values and favor range trading / pullback in the immediate future.

AUD/USD ââ,¬â€œ AUD/USD followed its breaking of the year + trendline (from May 2005) by extending gains to 1.7578; coming close to the 1/31 and 2/1 2006 highs of 1.7585.  As previously mentioned, the break of the trendline was very bullish and suggests that the path of least resistance is up with the mentioned 1.7585 a target followed by the 61.8% fibo of .7987-.7013 at .7614 the next resistance level.  Slowing momentum on the intraday charts evidenced by negative divergence with oscillators combined with the strong resistance at .7585 gives scope to a contra move.  Support is exceptionally strong at the .7462-.7488 zone ââ,¬â€œ a level backed by the 10 and 200 day SMAââ,¬â"¢s, the recent resisting trendline from May 2005 (now support) and yesterdayââ,¬â"¢s low.

NZD/USD ââ,¬â€œ The Kiwi was little changed yesterday as the pair trades in a short term slightly downward sloping channel.  The pair found support right just below the 23.6% fibo of .5991-.6372 at .6382.  Both daily and hourly oscillators are neutral and are indicative of the recent range.  Further, the pair again tested the 50 day SMA (and failed to break above) and weââ,¬â"¢ll reiterate from yesterday that the proximity of the 50 day SMA limits upside risk and serves as resistance at current levels.  Support comes in at the mentioned 38.2% fibo at .6227 with a break below targeting the 50% fibo of .6182.

Jamie Saettele is a Technical Currency Analyst for FXCM.