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Dollar Begins Week in Range
By Jamie Saettele | Published  09/18/2006 | Currency | Unrated
Dollar Begins Week in Range

EUR/USD â,“ The EURUSD slipped to 1.2630 Friday and today â,“ just below 61.8% fibo support (1.2456-1.2938) at 1.2640.  Short term upside momentum is picking up as RSI has crept to 50 and scope remains for a test of the 1.2700 figure â,“ resistance that is reinforced by the 61.8% of 1.2752-1.2630 at 1.2705.  The larger picture remains bearish as weekly MACD slope (13, 26) remains negative and price is trapped below the 66 day (3 month) SMA (currently at 1.2727).  Support is at the 132 day (6 month) SMA at 1.2611 and the confluence of the 78.6% of 1.2456-1.2938 / 7/26 low at 1.2557/59.

USD/JPY â,“ We have maintained a bullish tone against the â,"support zone from the 38.2% of 115.55-118.14 / 9/12 low at 117.15/36.â,  The last four dayâ,"s lows at 117.33, 117.29, 117.24 (and 117.13 today) serve to confirm the support.  However, bulls should be warned of a potential double top at 118.14 (9/12 and todayâ,"s highs).  Heavy selling from the double top and a break below the 117.13 low may see the pair offered until the 9/5 low at 115.55.  A push above there targets the 78.6% of 121.38-108.96 at 118.70.

GBP/USD â,“ Cable has rebounded from Fridayâ,"s low at 1.8753 to test the 50% of 1.8918-1.8753 at 1.8836.  Daily oscillators remain bearish and the advance from 1.8753 looks likes a 3 wave correction.  This evidence favors the downside against the 9/14 high at 1.8918.  A break above there suggests a deeper retracement of the move down to possibly the 78.6% fibo at 1.8985.  The pair remains just above a supporting trendline from the 4/3 low at 1.7249 .  A break below exposes the 9/11 low at 1.8602.

USD/CHF â,“ Last week we focused on the 7/19 high at 1.2595 and mentioned that â,"This is a â,"make or breakâ, point of reference.  Breakout potential exists as the Bollinger bands (daily) are widening from very tight levels.  Reinforcing the bullish view is the break above the 132 day (6 month) SMA on 9/12.  Price had remained below the 6 month moving average since 4/11/2006.  A break above 1.2595 targets the 4/21 high at 1.2822.  The 9/11 low at 1.2393 is support.â,  The USDCHF did exceed 1.2595, trading to a 4 month high to 1.2622 on Friday.  Thus, the previous comments stand.  Initial support is at a supporting line from the 8/31 low (1.2227) near 1.2480.

USD/CAD â,“ Little has changed with regards to the USDCAD.  The pair dipped to 1.1114, just above the 61.8% of 1.1028-1.1235 at 1.1107 on Thursday and has since rebounded to trade near the 1.1200 figure.  The proximity of that Fibonacci level along with the convincing bounce higher favors a test of 1.1235 (as long as 1.1114 holds).  22 day (1 month) momentum is right at 0 and is close to reaching positive territory for the first time in over a month.  A break above 1.1235 exposes the 8/15 high at 1.1319.  If 1.1114 fails, then a deeper correction towards the 78.6% fibo of 1.1028-1.1235 at 1.1072 may be taking place.

AUD/USD â,“ Fibonacci resistance from the 38.2% of .7721-.7481 at .7573 has held as Thursdayâ,"s high printed at .7568.  This is also former support from the 8/9 low at .7563.  We have maintained a bearish view for a while primarily because of IMM futures data but moving averages are lining up now and reinforcing our view.  The 2 week SMA has moved below the 1 month SMA and price is currently below the 3 month SMA (which is at .7542).  The 6 month SMA is at .7488 along with the 9/13 low at .7481.  A break below that confluence of support could trigger additional selling.  The next bearish target would be the 7/19 low at .7403.  Resistance remains yesterdayâ,"s high at .7568.  A push higher negates the immediate bearish view and suggests that a deeper correction of weakness is taking place â,“ possible towards the 61.8% fibo of .7721-.7481 at .7629.

NZD/USD â,“ Kiwi continues to advance and is nearing a Fibonacci confluence from the 50% of .7468-.5927 and the 61.8% of .7198-.5927 at .6695/.6710.  The 7/8/2005 and 12/23/2005 lows at .6683 and .6700 reinforce the forecasted resistance.  Strength looks overextended as daily oscillators all exhibit bearish divergence with price.  A break below the 9/4 high at .6580 could trigger offers and begin to imply that lower prices lie ahead.  In this case, support would be at the 61.8% of .6341-.6651 at .6460.

Jamie Saettele is a Technical Currency Analyst for FXCM.