Poslano Petek, 20th Marec 2009 od admin
USD/CAD Ends up Completing Head and Shoulder; 1.3000 Holds
There was a rally towards 1.3000 in February. Price action halted
at this resistance and developed a possible head and shoulders
with a break of the neckline ahead of the FOMC announcement.
This was a clue that the market was ready to reverse itself. But
only the clean break and inability to rise back above the
neckline was conclusive enough to signal that the market had
bearish bias. Of course the news disturbance was the trigger for
the subsequent 600 pip drop. The pair ends the week in
consolidation, but further decline see difficulty as it nears
major uptrending support that extends back to 10.14.08.
GBP/USD Rallies Past Major Resistance
We started to monitor the GBP/USD pair closely when it looked to
form a Gartley Pattern. Our initial look was at the 61.8%
retracement area, but the run-down extended to the 78.6% level,
which still loosely fit the description of a Gartley. The end of
this pattern developed into the next reversal pattern, an
inverse head and shoulders. The FOMC announcement came as the H
&S was at its second shoulder, and propelled prices past the
neckline in the following 4 hours. There was a little pause at
the broken neckline, which coincided with an important channel
resistance that extends back to 10.30.08. The rally continued on
Thursday but by Friday, ended up in consolidation around the 1
.4500 area, with 1.4600 as resistance. Mapping previous uptrend
to the current rally gives us a target at 1.5300, but 1.5000
would be a fair conservative 1st target to scale down any
positions.
USD/CHF: Reaction to FOMC Trumps reaction to SNB Intervention
This pair captures this issue’s main title. In compairng last
week’s reaction to the SNB intervention, this week’s FOMC
announcement definitely showed a more sustained move. The spike
from the SNB news came up to retest the 78.6% retracement area
and was not able to penetrate. Instead, a triangle was formed
with a flat bottom which was broken with a continuation pattern,
These price actions to start the week should alarm the trader of
bearish bias. Of course we know now that the FOMC news
disturbance gave this move a jolt and the USD/CHF fell back
below it’s level prior to the SNB intervention, and broke a
support at around 1.1500, which we saw as a major test for a
downtrend.
In the shorter time frame, the current move may seem to be
exhaustive now. But looking at the daily chart, we see that
further decline to 1.0500 is possible. We have seen in the past
year that this pair labors to rally, but plunges in declines. So
while there may be a short-term pullback, it may lead to further
and possibly sharp decline, with a fair 1st target at 1.0700.
EUR/GBP: Retracement or Consolidation Imminent
Technical Setup:
We did not have a retracement to the 0.9100 area this week, as we
had anticipated. We saw the market reject prices from coming
below 0.9200, resulting in another rally to 0.9500. This level
revisits resistance in late January, early February and is a
psychologically significant number as well. The RSI gives
further clues to the timing of a possible pause to our breakout
rally. On the chart, “a” at 0.9300 is a minor support, while “b”
is the intermediate support we had anticipated a retracement to
test. Therefore, trendfollowers who missed the initial breakout
entry may still have another chance. The timing is important,
and oscillators can give a hint. Consider though, in an uptrend,
the oscillator might give you a clue of resistance conditions,
but may not give you clues in re-entering (other than the
generic 50 level). Yes, a strong uptrend may not give the RSI a
chance to dip back to oversold levels, as this may ironically be
a signal that the uptrend is weak. This can be applied to price
action as well. Meaning, look for re-entry if prices ease back
towards 0.9100, but keep in mind that since the breakout from
that powerline was a strong one and prices have move somewhat
extensively from it in a short period of time, a retracement has
a lesser chance of reaching that “abandoned” powerline.
2-HOUR
The trader who decides to ride this rally despite missing the
initial kickoff, may want to look at the lower time frame for a
short term move. We see in the 2-H chart that the rally indeed
has paused and formed a triangle bottom. A decisive break on the
bottom may signal a longer retracement period, while a break on
top is less revealing until it also breaks th 0.9500 level.
AUD/USD: Sets up Late Entry Signal
Technical Setup:
Our anticipation zone of converging resistance and support was
marked by ranging price actions. After breaking out on the
upside, price action was still a little suspect. Thought
consistent, the rally was marked by short bursts, until the FOMC
announcement propelled the pair upwards on the back of greenback
weakness. This crossed above the intermediate resistance at 0
.6800, and we suspect this level to turn into support. The RSI on
the daily chart shows that conditions are ready for a
consolidation or retracement, just like like EUR/GBP. And much
like the EUR/GBP, the AUD/USD rally also formed a triangle
pattern, which sets up a breakout entry in the direction of the
trend. Look for a decisive breakout which also breaks above 0
.6950 for a re-entry into the trend. Otherwise, a break to the
downside warrants watchfulness on the intermediate powerline at
0.6800 as a possible support. If that breaks, the 0.6500 area
stands next as support.
