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Dollar Holds on Tight
By Jamie Saettele | Published  08/4/2006 | Currency | Unrated
Dollar Holds on Tight

EUR/USD â,“ EUR/USD made a rush for the 1.2800 figure again yesterday but subsequently fell towards the 10 day SMA at 1.2790.  The pair has support at the 78.6% fibo of 1.2859-1.2456 at 1.2772, but a break lower would target the confluence of the 50.0% fibo of 1.2859 â,“ 1.2456 / 7/28 low 1.2657 / 59.  However, with daily RSI looking bullish, a break above the 8/3 high of 1.2833 could clear the way for a move towards the 6/5 high of 1.2976 with little resistance in between.

USD/JPY â,“ As we said yesterday, â,"USD/JPY has rallied off of the double bottom at 114.17/18 from the 7/31 and 8/2 lows.  Price is approaching resistance at the 8/1 high at 115.37.â,  The pair continues to do the same, and a move above 115.37 would encounter further possible resistance from the 50% fibo of 117.38-114.16 at 115.77, as well as the 38.2% fibo at 116.17.  A break to the downside would see testing of the 7/31 and 8/2 lows at 114.17/18 again, and subsequent bearishness would test the 7/10 low of 113.42.

GBP/USD â,“ Cable has rallied towards the long term trendline drawn from the 12/16/04 high of 1.9548 at 1.8949.  Should the GBP/USD continue its upward movement and break the trendline, the pair would face resistance at the 78.6% fibo of 1.9548-1.7045 at 1.9013.  However, with daily RSI in overbought territory at 72, there could be a retracement towards the recent lows of 1.8850 on 8/4 and 1.8697 on 8/3.  The confluence of the 61.8% fibo of 1.9548-1.7045 and the 7/21 high at 1.8588 / 1.8597 would become support should prices follow through on a major correction.

USD/CHF â,“ USD/CHF is probing resistance at the 61.8% fibo of 1.2190-1.2595 at 1.2345, but daily oscillators are bearish and a turn downwards could target the confluence of the 8/1 low and the 38.2% fibo of 1.1919-1.2595 at 1.2254 / 57.  However, should the pair gain momentum, price could find a band of resistance between the 50% fibo of 1.2546 - 1.2252 at 1.2398 and the 7/28 high at 1.2424. 

USD/CAD â,“ USD/CAD continues to trade around the 38.2% fibo of 1.0927 - 1.1455 at 1.1255 and, as we said yesterday and will say again today,â,The longer term bias is still bullish and remains so unless 1.1039 is broken to the downside.â,  Immediate support is, again, at the 7/31 low at 1.1218 with additional losses probing the supporting trendline from the ascending triangle on the daily â,“ currently at 1.1131, which also happens to be the 61.8% fibo of 1.0929 â,“ 1.1455. 

AUD/USD â,“ AUD/USD continues to test the .7600 figure, as it has remained in a range between .7595 and .7680 for most of this week.  The pair is beginning to form a series of lower highs and is holding below a trendline from the 5/11 high of .7791, and daily MACD oscillator has turned to a negative slope.  Immediate support is at the 61.8% fibo of .7791 - .7270 at .7591, but if .7600 holds, then there is a triple bottom from the 7/28, 8/1, and 8/3 lows.  A sustained break below .7600 bolsters the bearish bias.  We are looking for a longer term turn to the downside in AUD/USD due to COT positioning.

NZD/USD â,“ Kiwi continues to consolidate within a triangle, so volatility could very well contract over the near term before a break occurs.  Hourly RSI is decreasing towards 30, giving the pair a bearish bias, but support lies at a trendline formed from the 7/28 low at .6143.  Further moves to the downside should target the confluence of the 7/28 low and the 38.2% fibo of .5927-.6282 at .6143 / 47.

Jamie Saettele is a Technical Currency Analyst for FXCM.