EUR/USD ââ,¬â€œ EUR/USD gained for the 16th day in 20 yesterday, which has happened on two separate occasions since the advent of the euro.  This 16-out-20-day-gain sequence last happened for 3 days in a row from 6/28/2002 ââ,¬â€œ 7/2/2002 and it happened yesterday.  If todayââ,¬â"¢s candle closes higher, then we will for the first time ever have 17 of the last 20 days as gains.  That first scenario that we mentioned in 2002 occurred at the end of the first leg of multi moth uptrend that ended at 1.3666.   This quantitative analysis sets the long term bias as bullish.  Furthermore after the 7/2/2002 candle, the market was obviously overextended (as it is now) and the pair fell 277 pips before resuming its next leg up.  Consequently, if we have topped out at 1.2724 (yesterdayââ,¬â"¢s high), then the area bound by the 38.2% fibo of 1.2065-1.2724 and 23.6% fibo of 1.1825-1.2724 is 1.2474-1.2512, which would place the end of a contra move anywhere from 212-250 pips from yesterdayââ,¬â"¢s high ââ,¬â€œ a number eerily similar to the 277 pip contra move that occurred in a similar scenario in 2002.  The ATR on 7/2/2002 and yesterday were both 103, suggesting similar volatility and possibly similar moves.

USD/JPY ââ,¬â€œ USD/JPY continues to correct and currently sits at the 23.6% fibo of 118.88-112.34 at  113.87.  Daily oscillators are turning up including RSI, which is now above 30.  There is not much congestion past the 4/24 low at 114.23, and thus a continued corrective move possibly tests the 38.2% fibo of 118.87-112.34 at 114.82.  Yesterdayââ,¬â"¢s 113.25 low is initial support with a break below giving scope to Mondayââ,¬â"¢s low at 112.33.  The downtrend remains intact given that the 3/1 low at 115.44 holds as resistance.

GBP/USD ââ,¬â€œ Cable traded higher and closed above the 9/5/05 high at 1.8501 thus making 8 month highs.  The hourly chart has made a double divergence ââ,¬â€œ two higher highs in price combined with two lower highs in oscillator values.  The corrections of this violent 14 day move from 1.7500 have been small and some would argue non-existent.  The double divergence certainly suggests that a more material correction/contra move is in order but evidence is overwhelming that the path of least resistance is up ââ,¬â€œ the most compelling being that the pair broke above the mentioned 1.8501.  Weakness comes into play at the 23.6% fibo of 1.7747-1.8546 at 1.8359 with additional weakness targeting the 38.2% fibo of 1.8241.  The next target to the upside would be the confluence of the 61.8% fibo of 1.9550-1.7046 / 3/28/05 low at 1.8590/92.  The uptrend remains intact as long as 1.7934 holds (1/25, 4/19 highs).

USD/CHF ââ,¬â€œ USD/CHF made new 2006 lows yesterday and came close to challenging the 9/5/2005 low at 1.2236.  The pair continues to hold above support, albeit barely, from the 50% fibo of 1.1283-1.3286 at 1.2285, which is also the 5/1 low.  Hourly MACD and RSI are both bullish as they show positive divergence and positive slope.  Resistance stems from yesterdayââ,¬â"¢s high of which a break above exposes the 23.6% fibo of 1.3193-1.2246 at 1.2268.  A break below the mentioned 1.2236 is required in order to give scope to additional losses with the next major support at the 1/12/2004 low of 1.2140.

USD/CAD ââ,¬â€œ The contra move up was rejected at 1.1150 yesterday and the pair currently trades just below the 1.1100 figure.  The consolidation of the extreme losses could test the 23.6% fibo of 1.1771-1.1011 at 1.1188 with a break exposing the confluence of the 38.2% fibo / 3/2 low at 1.1297/1.1300 ââ,¬â€œ a level which if held keeps the recent downtrend from 1.1771 intact.  A resumption of the downtrend encounters the 5/3 low at 1.1011 low and eventually the 20% fibo of 1.1297-1.1771 at 1.0825.  The downtrend remains intact as long as the low from 3/2 at 1.1297 holds as resistance.

AUD/USD ââ,¬â€œ The Aussie rallied to 9/21, 9/22 high at 1.7728 yesterday but has retreated in early morning trading back below the .7700 figure.  The story is similar to that of other majors with massive negative divergence among oscillators and price on the hourly as the momentum has stalled a bit after 8 consecutive days of gains.  Support comes in at yesterdayââ,¬â"¢s low of .7651 with a break below exposing the 23.6% fibo of .7014-.7728 at .7560.  A break above yesterdayââ,¬â"¢s high at 1.7728 could see the 912/05 high at .7762.

NZD/USD ââ,¬â€œ Kiwi did challenge but failed just shy of yesterdayââ,¬â"¢s high of .6443, and has since retreated below .6400.  Initial support going forward is yesterdayââ,¬â"¢s low of .6361.  Hourly oscillators are bearish with MACD declining below 0 and RSI declining below 50.  Additional weakness past .6361 targets the confluence of the 23.6% fibo of .5991-.6443 / 5/2 low at .6335/37.  A resumption of strength past yesterdayââ,¬â"¢s high exposes the 3/15 high at .6471.

Jamie Saettele is a Technical Currency Analyst for FXCM.