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Can you grade one level of support relative to another? Is a pause at a specific price point more important today than the same support level a month ago or 6 months ago? I think that there are ways to estimate one support level as more important than another. A good example is what is going on right now on the AUD/USD. Clearly we are at a long term support level having been here before in December and January during the last disruption in oil prices. However, what else is true is that we are at a level of extreme price movement based on a reading from the CCI or commodity channel index.
I use technical indicators like the CCI to grade support and resistance levels. When support coincides with a historically low level on the CCI where the market has reversed significantly before, I take note. That is the situation now. Support in the price action on the AUD/USD is occuring at the same time that we are clearing an extreme reading on the CCI. I have found that this is a good indicator that a continued trend is at risk and a bounce may occur.
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Comment : Euro formed an upward reaction last week, after the lows at 1.4600 area, reaching the area of 1.4900 on Thursday. Bears gained momentum at those levels, as expected, and euro was led towards 1.4700 area again. A move resumption to lower levels is possible, as we will see in the chart analysis below. After such a sharp decline, which didn’t give much opportunity to be followed, the first reaction towards 1.4900-1.5000 was expected to meet sellers, as we had mentioned in our analysis last week. We should keep in mind that the target that emerges from the double top formation, which was breached downwards, is found at 1.4500-50 area, while the basic trend line that links 2005 lows is reached at 1.4450 area.As we have mentioned in our previous analysis, the ranges for the decline are found at 1.4550 area, and the most extreme scenario-according to current facts- would be a reach of 1.4300 area. The most likely scenario would be a formation of an important low between 1.4450 and 1.4550. From those levels, a correction (from 1.6040 tops) around 38.2% and 50% would be possible and a retracement to the previous base of 1.5300, which should be tested as resistance, is likely. For the time being, the downward move is been continued from the 1.4900 reaction, and first targets are set at 1.4660-70 and 1.4620-40. A move to new lows will lead euro to the first important target area (1.4500-50), followed by the area of 1.4430-50. Intraday resistance emerges at 1.4760-70 and 1.4800-25, which is more important. This negative outlook will change after a move above Thursday’s tops at 1.4910…
TRADING EUR/USD SWING TRADING : Sell positions, that were opened at the retracement towards 1.4900, where our first targets were set, could have as first target a pullback to 1.4630 lows. The upper part could remain open for the reach of the basic targets at 1.4550 area. Below those levels buy opportunities will emerge for the short term, adding positions per 50-70 pips until 1.4370-00 area, with stops below 1.4300. First target will be at 1.5000 and according to the conditions that will be formed, we will follow until 1.5200-5300 area. INTRADAY TRADING : The short term trend after the reach of 1.4900 is bearish and should remain at least until the area of 1,4660-80 or 1,4600-30. We will use the first reaction towards the middle Bollinger in the hourly chart for intraday sell positions, adding more at 1.4790-4805, and stops above 1,4835. Short term (small) buy positions could be tried at 1,4660-70 and 1,4630-40 support levels, with tight stops and targets.
Comment : The beginning of the week finds the pound still weak, as the decline was continued on Friday, below the important support levels of 1.8500. Our targets are set at 1.8300-5, where our target after the break of the big consolidation (we can see it in the daily chart) and the two equal waves from 2007 tops (AB and CD in the daily chart) are found. As a result, after a move below 1.8350 area, we will examine the formation of an important short term low scenario. We will abandon this scenario after a move below 1.8270, and if these levels are breached, next important targets are set at 1.8000. This would be an extreme but yet possible short term scenario… Important intraday resistance is found at 1,8500-30 and 1,8580-8610, which is more important.
TRADING GBP/USD : The sharp decline on Friday was continued in the beginning of the week, leading to the 1.8400 area. For the short term, we will use any reaction towards 1.8500-30 area for sell positions with stops above 1.8560 and target at a retracement to previous lows. Sell orders could be tried again at 1,8590-8610 with stops above 1,8650… A move below 1,8350 will be used for buy positions, adding more at 1,8300 and stops below 1.8250. Our target for these positions will be wider at 1,8900-1,9000…
USD/JPY
You can find the complete analysis at the pdf...
Technical analysis-Comments G. Antonakos Head of Analysis Dept.
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Because the markets are largely sitting on key support and resistance levels right now it makes technicals much more important and critical than some of the fundamentals we may normally be interested in. Market sentiment at these levels can be extremely volatile so I am watching those announcements that are likely to have the biggest impact on forex traders in the short term.
From that perspective it is tempting to get a little over focused on the USD, and with GDP and FOMC releases due this week that temptation is somewhat justified. Traders in general have been increasing their outlook for growth in the US recently as evidenced by the trend in equities. If the GDP prelim. numbers or consumer confidence or even the FOMC minutes appear soft we could get a rejection at resistance on the USD and therefore a continued reversal across the majors. Check out the video for our take on the rest of the week's news and what we think will matter most.
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The Markets Today Thursday 07 August 2008 / 10:15h CET
EUR/USD
1.5470
EXPECTATION
THE RISK
SUPPORT AND RESISTANCE
Down to 1.5400 folowed by a 60-pip pullback. Bearish trend now at 1.5510, while underneath the Euro should continue to soften. We lower our target to 1.5290
A daily close above 1.5510 ends the bearish move and risks to see the pair hold in a range of 1.5450/1.5750 a while longer.
1.5450 MINOR
1.5475 MINOR
1.5425 STRONG
1.5510 TREND
1.5350 TARGET
1.5540 STRONG
GBP/USD
1.9500
EXPECTATION
THE RISK
SUPPORT AND RESISTANCE
A new low of 1.9460, this is a strong support and we risk to reverse up to 1.9565 before resuming the down-trend.
A break through 1.9460 has room for 1.9330. On top a daily close above 1.9565 can see a larger pull-back to above 1.97
1.9495 MINOR
1.9510 MINOR
1.9460 STRONG
1.9565 STRONG
1.9330 TARGET
1.9620 STRONG
USD/JPY
109.30
EXPECTATION
THE RISK
SUPPORT AND RESISTANCE
Top of 109.75 means target achieved. Minor bullish trend at 109.35, a break there risks a fall back to strong 108.30
The market may want to see the 110 handle trade and keep the pair in high range all day.
109.35 MINOR
109.80 STRONG
108.90 STRONG
110.05 MINOR
108.30 KEY
110.30 STRONG
USD/CHF
1.0555
EXPECTATION
THE RISK
SUPPORT AND RESISTANCE
1.0620 high and back to the rising support at 1.0550. While this holds we can attempt 1.06 again, target remains 1.0660
A break of 1.0550 on the 4-H chart risks a dip to 1.0485 key, a lower daily close stops the bullish view.
1.0550 MINOR
1.0585 MINOR
1.0485 KEY
1.0620 MINOR
1.0445 STRONG
1.0660 TARGET
XAU/USD
883.00
EXPECTATION
THE RISK
SUPPORT AND RESISTANCE
Expect Gold to remain range-bound 872 / 888, bias is to widen the downside towards 865 or even 850
A daily close above 888 could see Gold try the 905 key resistance tomorrow.
880 MINOR
888 STRONG
872 STRONG
894 MINOR
865 STRONG
906 KEY
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The Markets Today Wednesday 06 August 2008 / 09:50h CET
EUR/USD
1.5500
EXPECTATION
THE RISK
SUPPORT AND RESISTANCE
Down to 1.5440 and back. Medium-term bearish trend-line at 1.5545 this morning, sell any spikes, continue to target 1.5350 this week.
The Euro may not spike and simply fall back to 1.5470 with space to fall further. A daily close above 1.5550 stops the immediate bearish view.
1.5470 MINOR
1.5515 MINOR
1.5435 STRONG
1.5545 TREND
1.5350 TARGET
1.5610 STRONG
GBP/USD
1.9560
EXPECTATION
THE RISK
SUPPORT AND RESISTANCE
The downside was widened to 1.9510, since any recovery has been short-lived and pressure is still on the downside. Looking to extend the current fall to 1.9430 or even further
Strong initial resistance 1.9600. Intra-day allow for spikes to 1.9630 to sell again, a daily close higher risks 1.9800
1.9515 MINOR
1.9600 STRONG
1.9460 STRONG
1.9630 STRONG
1.9430 TARGET
1.9720 STRONG
USD/JPY
108.30
EXPECTATION
THE RISK
SUPPORT AND RESISTANCE
It has made a new high overnight and for now remains above old 108.25 high. Stay long, expect a rise to 109.50-ish.
Stop longs upon breaking 108.15, stronger support 107.80, a daily close lower risks a correction.
108.20 MINOR
108.50 MINOR
107.80 STRONG
108.85 MINOR
107.50 MINOR
109.30 TARGET
USD/CHF
1.0515
EXPECTATION
THE RISK
SUPPORT AND RESISTANCE
Very short-term bullish trend broke this morning, the pair may see a set-back to as low as 1.0445, buy dips.
A return back above 1.0530 turns us bullish, medium-term target remains 1.0660
1.0495 MINOR
1.0535 MINOR
1.0445 KEY
1.0590 MINOR
1.0395 STRONG
1.0660 TARGET
XAU/USD
884.00
EXPECTATION
THE RISK
SUPPORT AND RESISTANCE
Gold fell as low as 872 before starting to turn. Currently on a minor upswing it may try the 888 level and could even reach 895. SELL rallies
A new dip underneath of 880 has space for at least 865 or even 850
880 STRONG
888 MINOR
873 MINOR
895 STRONG
865 STRONG
903 STRONG
Throughout our partnership with the industrial leaders, we are capable of delivering incomparable quality of online currency trading service. ForexGen services are all controlled by the international banking and financial regulatory standards. ForexGen is continuously providing the Forex market's safest trading terms & conditions. Providing professional currency trading services that meet our client's expectations is our first priority.
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ForexGen customer satisfaction is our major objective. To reach our business goals, we strive to put our client's goals in focus. We highly value our clients and always aim to exceed their expectations and cross the limitations encountered by the sophistication of the Forex trading industry.
Euro is headed lower, target 1.5350. Strong support on the way lower at 1.5500 and 1.5460 may slow the move.
Short-term bearish trend at 1.5535. An hourly close above that can see a pullback to 1.5580.
1.5500 STRONG
1.5535 TREND
1.5460 STRONG
1.5585 KEY
1.5350 TARGET
1.5605 STRONG
GBP/USD
1.9565
EXPECTATION
THE RISK
SUPPORT AND RESISTANCE
1.9660 did not hold, Cable is at the lowest levels in 7-weeks and has space to fall to 1.9430.
Short-term bearish resistance at 1.9610 – a breech there may lift the pair to stronger 1.9660, but while the day loses underneath of that we will remain bearish
1.9550 MINOR
1.9615 MINOR
1.9480 STRONG
1.9660 STRONG
1.9430 TARGET
1.9740 KEY
USD/JPY
107.80
EXPECTATION
THE RISK
SUPPORT AND RESISTANCE
The top broke, 108.30 resistance held again and the pair returned to strong support at 107.65. BUY here, next attempt up will lead 100 pips higher to 109.35.
Stop longs upon breaking 107.50, risk is a dip to 106.60
107.65 STRONG
107.90 MINOR
107.15 MINOR
108.30 MINOR
106.60 STRONG
109.30 TARGET
USD/CHF
1.0520
EXPECTATION
THE RISK
SUPPORT AND RESISTANCE
Closed the day at the high, for now holding minor bullish support 1.0500, while above we are looking to extend towards 1.0660
An hourly close underneath of 1.0490 risks 1.0420/40 in the short-term.
1.0500 MINOR
1.0535 MINOR
1.0450 STRONG
1.0590 MINOR
1.0420 KEY
1.0660 TARGET
XAU/USD
885.00
EXPECTATION
THE RISK
SUPPORT AND RESISTANCE
Looking weak this morning, it has nearly reached our 882 target. This may offer some intermediary support and Gold could pull back to 894 for a new SELL
A fall through 880 has room for 865 or even 850 this week.
882 STRONG
888 MINOR
875 MINOR895 STRONG
895 STRONG
865 STRONG
903 STRONG
Throughout our partnership with the industrial leaders, we are capable of delivering incomparable quality of online currency trading service. ForexGen services are all controlled by the international banking and financial regulatory standards. ForexGen is continuously providing the Forex market's safest trading terms & conditions. Providing professional currency trading services that meet our client's expectations is our first priority.
ForexGen principals:
ForexGen customer satisfaction is our major objective. To reach our business goals, we strive to put our client's goals in focus. We highly value our clients and always aim to exceed their expectations and cross the limitations encountered by the sophistication of the Forex trading industry.
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