EUR/USD ââ,¬â€œ The long term inverse head and shoulders reversal pattern has played out to perfection as the pair trades just shy of its 50% fibo of 1.3666-1.1640 at 1.2650.  The past two weeks have seen gains of 235 and 268 pips.  This is just the second time since the advent of the euro (January 1999) that the pair has gained more than 200 pips for two consecutive weeks.  The other occurrence was during the weeks ending 6/21/2002 and 6/28/2002 when the pair gained 281 and 221 pips and the next week was a contra move to the tune of 181 pips.  If history repeats, then expect a contra move this week.  Taking a look at the bigger picture, it is interesting to note that the June 2002 occurrence was set in the middle of an uptrend from .9000 to 1.0200.  Price ended the 6/28 week at .9918 and, as mentioned, retraced the next week before continuing to 1.0200.  This suggests that we see a retrace of the recent move before a continuation of the uptrend towards the 61.8% fibo of 1.3666-1.1640 at 1.2889.

USD/JPY - USD/JPY broke below the 113.41 low made on 1/12 and challenged the 113.00 figure.  As mentioned last week, the pair has crossed below and closed below the 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.  After the break of the 1/12 low, scope remains for a test of the July 2004 high at 112.50.  Positive divergence on the dealer charts along with the pair hugging the lower Bollinger band on the daily leaves possibility for a contra move.  Resistance comes in at the 23.6% of 118.86-113.02 at 114.40 with a break above targeting the 38.2% at 115.24.

GBP/USD ââ,¬â€œ Cable continues to extend gains beyond the former double top at 1.7934 and has momentarily conquered 1.8200.  The pair trades right at a downward sloping trendline that begins at the December 2004 high of 1.9548.  Negative divergence with RSI on the dealer chart combined with the trendline resistance gives scope to a possible return towards the psychological 1.8000.  Support is connoted by the 23.6% of 1.7799-1.8278 at 1.8165 as well as the 38.2% and 50% retracements at 1.8096 and 1.8038.  A resumption of the strong move upward sees a test of the 50% fibo of 1.9546-1.7039 at 1.8291.  As mentioned on Friday, ADX is now greater than 30 and indicates a trending market but historically with GBP/USD; ADX usually crosses above 30 at or near the very end of the trend.

USD/CHF ââ,¬â€œUSD/CHF has fallen through the floor and tested its 50% fibo of 1.1476-1.3283 at 1.2379.  Fridayââ,¬â"¢s move was so strong that the pair closed below its lower Bollinger band on the daily, an occurrence that has often preceded a reversal/correction over the past 2 months.  The Tokyo low of 1.2371 is initial support with a break below targeting the 9/5/05 low at 1.2236.  Moves counter to the overall downtrend target fibos from the 1.2820-1.2371 decline at 1.2472, 1.2539, and 1.2592.

USD/CAD ââ,¬â€œ The Canadian Dollar is on a tear against the US Dollar as the pair continues to make fresh 28 year lows.  In fact, the pair broke the November 1991 low of 1.1189 on Friday and continues to trade below.  Since USD/CAD has not traded to such prices in nearly three decades, there is little to reference at the moment regarding support and resistance.  However, we can use still use Fibonacci theory to forecast support.  As such, the 138.2% and 161.8% fibos of the 1.1297-1.1771 March bull wave come in at 1.1116 and 1.1005 and are potential supports.  A bounce higher off of the lower Bollinger band on the daily targets the 4/26 low at 1.1251 and the confluence of the 23.6% fibo of 1.1771-1.1154 / 10 day SMA at 1.1298/1.1305.

AUD/USD ââ,¬â€œ AUD/USD gained for the fourth consecutive day on Friday and rallied to the 61.8% fibo of .7987-.7017 at .7616 in Tokyo trading last night before retreating back below the .7600 figure.  On the daily, RSI is falling from overbought levels and is now below 70; suggesting that a corrective move is imminent.  Further, negative divergence with MACD, slow 14 period stochastic and RSI agree with the daily assessment.  The proximity of the 61.8% fibo mentioned above / Tokyo high at .7516 limits upside risk.  Support is designated from the 4/26 high at .7544 with a break below exposing the 23.6% fibo of .7013-.7618 at .7475.

NZD/USD ââ,¬â€œ The Kiwi also tacked on gains in Friday trading after forming a doji on Thursday. The pair found resistance right just above the 38.2% fibo of .6998-.5991 at .6376.  Hourly oscillators are bearish as they, like most oscillators on the majors, show negative divergence along with declining oscillator values.  The pair did cross the 50 day SMA after being rejected by the longer term moving averages twice early last week.  The 50 day is now support at .6325 with additional losses below exposing the +23.6% fibo of .5991-.6387 at .6294.

Jamie Saettele is a Technical Currency Analyst for FXCM.