1.3937 caps for now.
EUR/USD’s short-term recovery (worth almost 6%) has been capped below resistance at 1.3937.
Bears still need a meaningful confirmation beneath that all-important psychological level at 1.3000 to unlock further scope into 1.2860 (near 2011 low) and even further.
Key resistance remains at 1.3937 (15th Sept high), which is near the previous breakout zone at 1.4000. Confirmation above here will neutralise the status quo.
Inversely, the US dollar remains above the 200 day moving average as most other popular “risk” markets weaken from overcrowded uptrends. Short-term price activity has found initial support close to the previous breakout zone at 76.40.
Speculative (net long) liquidity flows are maintaining their spike above our trigger level of 15000 contracts and is holding at 3 standard deviations from the yearly average. This will help sustain the bull-run from historic oversold extremes (momentum, sentiment and liquidity).
STRATEGY:Short 3 at 1.3660, Objs: 1.3340/1.3000/1.2860, Stop: 1.3910.
Under 1.5632 to strengthen current mild bearish bias.
GBP/USD continues to consolidate just under the 38.2% retrace of the 1.6747-1.5272 fall. A sustained break under 1.5632 is now required to increase the probability of a lasting lower high near this key retrace.
Strategy is still hampered by a lack of reliable structure, largely due to the range bound nature of the market in the medium-term time frame. Should this continue then a larger recovery phase, back towards the 200 day moving average would come back into focus. Remaining neutral is deemed best for now.
GBP/USD has already experienced a large devaluation versus the US Dollar, therefore any further strengthening in the US Dollar may not see the full participation of GBP/USD. Instead GBP/USD is favoured to remain stronger then most.
STRATEGY: Await signal.
USD/JPY is possibly basing around its all-time low.
USD/JPY is maintaining a confluence of DeMark™ exhaustion bullish signals, after the new post WWII record low which was carved out at 75.95.
These reversal signals are also following the second post intervention retracement in 2011, which is holding around a multi-week base pattern. It is also worth noting that our volatility measures remain very low and continue to favour a major breakout over the short-term horizon.
The medium/long-term view remains bullish, watching for a sustained move above our initial upside trigger level at 77.68. This would offer a resumption of the preferred new structural bull-cycle into the all-important psychological level at 80.00, near 80.24 (post BOJ intervention II high).
Keep in mind that such a scenario would help reactivate the longer-term technical bias, including prior monthly DeMark™ exhaustion signals, within the ending diagonal pattern, which was part of a major Elliott Wave cycle. Only a sustained weekly close below 76.25 will lead to a reassessment of the view and extend temporary weakness into 74.55.
STRATEGY: Long 3 at 77.20, Objs: 80.20/81.50/83.30, Stop: 75.90.
Lower high in place at 0.9083.
USD/CHF appears to have printed a lower high at 0.9083 following the break under 0.8881 yesterday. While under 0.9123 a continuation of this weakness is favoured.
It is also noted that the current trading region is close to the location of the 50 week moving average, at 0.8949. Thus, a continuation of weakness would also warn of a breakdown of the recent recovery structure. However, back under 0.7712 is required to change the long-term bullish bias.
Today’s break lower also opens up the potential for a further extension towards 0.8600, where a return to a bullish bias would become attractive again.
STRATEGY: Buy limit 3 at 0.8600, Objs: 0.9000/0.9200/0.9316, Stop: 0.8500.
Bulls meet initial support close to the psychological 1.0000 level.
USD/CAD bulls are reversing higher from that all-important 1.0000 level (psychological level and prior trading range).
Positive momentum needs to push above 1.0400 to extend the recovery higher above the old resistance level at 1.0673 (August high & Congestion zone).
A strong directional confirmation above here will open a much larger recovery into 1.0850 plus. This would extend the upside breakout from the rate’s ending triangle pattern, which was part of a major Elliott Wave cycle.
Meanwhile, only a sustained close beneath 1.0100 will extend bearish setbacks into next the support level at 0.9750.
Elsewhere, EUR/CAD is extending above its 200-day MA, within a large multi-month trading range. Key resistance continues to hold at 1.4379 (June swing high), which has for some time marked a strong distribution pattern.
CHF/CAD is retesting its support nearby the 200-day MA at 1.1227, following the dramatic price slide lower (triggered by the SNB intervention). The cross-rate has now retraced more than half of its 2011 gains.
STRATEGY:Buy Stop 3: 1.0275, Objs:1.0660/1.0850/1.1110, Stop: 1.0150.
Remains beneath 200-day MA at 1.0384.
AUD/USD’s bullish recovery has reversed beneath the long-term 200-day MA which is currently holding at 1.0385. Expect this area to cap further into the rate’s psychological level at 1.0000.
In terms of the big picture, AUD/USD’s multi-year uptrend remains under pressure since the previous breakdown. The bears need to confirm beneath 0.9388 (04th Oct low & structural level) to unlock a much larger decline into 0.9220 and 0.9144 (38.2% Fib-2008 uptrend).
Elsewhere, the Aussie dollar remains stable against the New Zealand dollar. The pair is still locked within its new bear cycle structure while it holds beneath its 200-day MA. Key support can be found at 1.2320 and 1.2100.
The Aussie dollar has stabilised against the Japanese yen, after failing into resistance at 79.92. Watch for a resumption of the major downtrend from spring 2011. Strong downside scope will signal further unwinding of global risk appetite.
STRATEGY: Sell Stop 3: 1.0090, Objs: 0.9930/0.9620/0.9380, Stop: 1.0290.
Range bound short-term, with a return to 122.65 favoured.
GBP/JPY saw a minor break under 120.34 which failed to hold, reaching 120.00. This is suggestive of the potential for a further recovery leg higher to test the region near 123.00.
The structure present since 116.84 is deemed corrective, with scope for a final swing higher to complete this corrective phase. However, a sustained push under the recent low at 120.00 will warn of resumption of weakness back towards the floor near 117.00. However, an eventual return to 116.84/98 is expected, below which would open up an extension towards 115.00 immediately.
A sustained break over 123.31 is required to change the current bearish bias. Should this take place a larger corrective phase higher would then be anticipated.
STRATEGY:Sell limit 3 at 123.15, Objs: 121.60/118.50/116.50, Stop: 124.40.
Consolidates above the 104.96/104.99 floor.
EUR/JPY continues to range just above the 104.96/99 floor, following initial support over the last few sessions. Provided this floor is not breached, scope is seen for a fresh swing higher to re-test the 107.68 level. However, the larger structure present since 114.18 favours the formation of a lower high close to 108.03, for a return to re-test 100.76.
Failure to hold under 108.03 will warn of a larger recovery structure, negating our medium-term bearish bias. Also, if a push over 108.03 can be sustained this will bring into focus a potential false break lower out of a falling channel in the daily timeframe.
Under the annual low would open up an extension to 97.50, ahead of 92.80, levels not seen since 2000.
STRATEGY:Sell limit 3 at 107.90, Objs: 106.90/104.00/100.00, Stop: 109.00.
Further swing higher anticipated towards 0.8886/85.
EUR/GBP continues to trade close to the 200 day moving average over recent sessions. However, the bigger picture is dominated by the recent failure to hold over the key high at 0.8672. Thus the rise from 0.8530 is viewed as being a corrective structure with scope for a lower high to form closer to the old 0.8886/85 double top. So, although further short-term strength may follow, supply is favoured to manifest near 0.8885.
Should this move be realised, it would also take us close to the upper end of the recent trading range. There is an increased probability of general range bound trade, thus short entry at higher levels is also supported by the potential of a return to a period similar to that between 2003 and 2007 (not shown).
Back over 0.8960 is required to neutralise our mild bearish bias, in a generally rangebound environment.
STRATEGY:Sell limit 3 at 0.8870, Objs: 0.8750/0.8580/0.8400, Stop: 0.8970.
Fails to garner momentum close to channnel resistance.
Long stopped. Await fresh signal.
EUR/CHF failed to garner momentum after meeting supply close to the resistance of an hourly rising channel. The subsequent weakness is currently testing the support of this same structure. A failure to find support here would warn of a larger fall back down to the 1.2000 level.
Although bullish for the time being, it is expected that the 1.2500-1.3000 zone may limit the current recovery phase from 1.0075. It is anticipated that the markets willingness to trade with the bias of the SNB may exhaust should this trading region be met, as further gains in this cross are likely to become more dependent on economic releases.
A sustained move under 1.2024 will alter our near-term bullish bias.
STRATEGY: Long stopped. Await fresh trading signal.
Risk of a larger decline beneath $1600.
Gold remains bearish after its dramatic 20% price fall, which helped confirm the extreme overbought conditions (marked by DeMark™ indicators). This also timed a key cycle peak, ahead of that all-important $2000 glass-ceiling.
Most concerning is that speculative (net long) flows have recently breached a key downside level which may threaten over 2 years of sizeable long gold positions.
In price terms, Gold’s latest 20% bearish slide is still worth less than the largest average drawdown measured since the start of the yellow metal’s long-term bull market in 1999.
There is heightened risk of a much larger decline if we confirm a weekly close beneath $1600 and $1547 (200-day MA), which has not been breached in 3 years!
A number of “bargain hunting” trend-followers will be watching this benchmark “line in the sand” for repeat support or a potential big squeeze lower into $1300 and perhaps even $1040-1000. Remember, this would still offer a unique buying opportunity in the near future.
STRATEGY: SHORT 1: 1805, Obj: 1300. Stop: 1704.
Key support at $26.0700.
Silver’s latest price capitulation is a painful reminder to the investment community that lightning can strike twice. Note, this marks the second time silver has crashed, following its 30% fall from April this year.
The move was triggered following a DeMark™ exhaustion sell signal and has now wiped out almost 50% of silver’s prior gains (taken from Silver’s all-time high at 49.7900) which was last seen in 1980.
Such a dramatic move traditionally produces volatile trading ranges. This allows the market to have enough time to recover and accumulate renewed buying interest.
Expect a large trading range to hold between $37.0000-26.0700 over the multi-week/month horizon, with downside macro risk into $21.5165 (61.8% Fib-1999 bull market) and $20.0000. This would still maintain silver’s long-term uptrend and help offer a potential buying opportunity for the eventual resumption higher.
Continue to watch the gold-silver “mint” ratio which has now accelerated higher by 67%, suggesting further risk aversion over the next few weeks.
STRATEGY:Short 3 at 31.8150, Objs: 28.4300/26.0700/23.3400, Stop: 33.0550.
Source http://www.fxstreet.com/technical/analysis-reports/technical-trading-strategies/2011-10-21.html
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