Friday, February 25, 2011

Currency market today

In a recap of the week so far as of 9:30AM EST:

AUDUSD has moved from a low of .9968 on Tuesday to a high of 1.0152 so far today, the highest price since last Friday's 1.0058. While price action has been choppy this week, the pair has managed to stay above parity for the most part. There have been only two closes below parity the entire month. The current price action is at resistance but should it make it through, next resistance is at 1.0200 and then of course 1.0257. Beyond that, one can assume that the longer-term uptrend is resuming. Only below .9804 would the bears begin to get excited and below .9537, there'd be blood in the streets. Obviously, the pair is well above those levels despite bearish candle formations on the longer-term charts.

EURGBP reached a high of .8593 this morning, its highest high since February 1. Beyond this is resistance at .8649/72, .8818 and .8941. On the daily chart, this could be shaping into a triple top (.8649 on 12/31; .8672 on 1/26). However, confirmation of the triple top won't come until price drops below .8285, quite a ways down and with some good support in the way. Nearest support is .8531 and .8500.

EURJPY is in a corrective pattern and yesterday formed a doji candle with a low of 112.20. This pushed it below the 10- and 20-day moving averages. It's still above the 50-, 100-, and 200-day averages and above the long-term downtrend line on the weekly chart. However, bulls are waiting on moves above 115.69 in the short-term and then 119.66. On the downside, 106.83 and 105.44 are the support levels to watch as a close below would signal resumption of the longer-term downtrend. Near-term support is quite a bit above those numbers at 111.24, 110.77 and 109.58.

EURUSD really needs to climb above the February 1st high of 1.3862. It's trying. The high yesterday was 1.3838. A close above 1.38 this week would be bullish. 1.3700 is the first support level to watch—the low so far this morning has been 1.3743. After that is 1.3650 and then 1.3594, 1.3524, and 1.3429, the low for the month. Obviously, bulls are hoping to see 1.40 sometime soon. Next week's price action should be interesting.

GBPJPY is still above a long-term monthly downtrend line but has dipped below the 200-day moving average today with a low, so far, of 131.38. The low for the month was 1.3091 on February 1st. This week has seen choppy price action in many pairs and this one is no different. The pair made a new high last week at 135.54 so there is bullish price behavior to contend with even though the pair is currently correcting. I'd expect 129.25 to contain the correction (.618 of the move up from 125.51) and before that is the prior swing low at 129.52. Resistance is at 135.54, 136.24, and 137.79.

GBPUSD has had a higher close each week this month and this is bullish as long as it holds above 1.5963. However, there's a potential for a double top formation with the high of 1.6300 in early November and the high of 1.6282 in early February. The high this week has been 1.6276. There is no confirmation of the potential double top until price broke below 1.5345, quite a ways below here. If cable can maintain its bullish behavior, expect to see 1.6300, 1.6461 and 1.6878.

USDCAD continues to sink. The low so far this morning is .9796. Support is at .9771 and then .9711, the 2008 low. Below that there's not a lot stopping it until it reaches .9417. The triangle price target was .9549. The only good thing you can say is that if you want to try a long position, the stop can be very tight. Resistance is at .9960 and 1.0058.

USDCHF is another suffering pair with a low yesterday of .9234. This has broken below most reasonable projections of support. I prepared charts earlier this year that show it could get to 90 and it seems to be on its way. The weekly high was .9506. One needs to see a move above that to believe it's recovering but until it can climb above .9784, there's not a lot to say.

USDJPY: The month's high was 83.97, reached the 16th and the pair has been dropping since then with a low so far this morning of 81.66. This is near key support at 81.35. Below this is 81.10 and 80.24. 83.91 is likely to be resistance, the downtrend line of the monthly wedge pattern.

© Dianne Fecteau, 2011. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.

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