FX Technical Weekly

Weekly Trend Duration and Support/Resistance

	TrendW	CURR	1 STD	2 STD	3 STD	ATR(13w)	S3	S2	S1	R1	R2	R3
EURUSD	Down	5	6	12	18	2.97%	1.2794	1.2918	1.3045	1.3304	1.3435	1.3565
GBPUSD	Down	2	6	13	19	2.11%	1.5190	1.5295	1.5402	1.5619	1.5728	1.5837
AUDUSD	Up	1	7	13	20	2.92%	0.9606	0.9698	0.9792	0.9983	1.0079	1.0176
NZDUSD	Down	3	9	17	26	3.06%	0.7162	0.7233	0.7306	0.7456	0.7532	0.7607
USDJPY	Up	5	5	9	14	1.98%	82.31	82.85	83.39	84.49	85.05	85.60
USDCAD	Down	7	4	7	11	1.95%	0.9915	0.9978	1.0043	1.0174	1.0239	1.0305
USDCHF	Down	1	7	14	21	2.72%	0.9436	0.9520	0.9606	0.9781	0.9869	0.9957
EURJPY	Down	3	4	9	13	2.32%	108.06	108.89	109.72	111.43	112.28	113.14
GBPJPY	Down	1	7	13	20	2.24%	127.32	128.25	129.21	131.14	132.11	133.09
EURGBP	Down	6	7	14	22	2.27%	0.8303	0.8364	0.8427	0.8555	0.8619	0.8684

-TrendW is weekly trend and CURR denotes how long the current trend has been underway in weeks. 1,2,3 STD are 1st,2nd, and 3rd standard deviations of the duration of trends measured over the last 150 weeks (3 years).

-ATR(13w) is 13 week average true range expressed as a percentage

-On the charts below, magenta bars/candles indicate key reversals (classic definition) from a 13 week high/low and a range for the week that is at least as large as 13 week ATR

Euro / US Dollar

Weekly Candles

Prepared by Jamie Saettele

Jamie: Quite simply, the EURUSD pattern is bearish against 13500. The rally to that level is a clear 3 wave advance and minimum expectations are for a drop below 13160. A near term objective is 13400 (100% extension) and a drop below 12970 would ignite the fire that burns deep within the bear and shift focus to the former pivot low at 12585. As noted in recent days, “bears should be cautious as the monthly low was put in on the first day of the month.”

Joel: Despite the recent setbacks from 1.3500, the market remains locked in some broader consolidation with the range being defined between 1.3165 and 1.3500. A break and close back below 1.3165 will now be required to open a bearish resumption towards 1.2970 further down, while back above 1.3500 delays bearish prospects, and exposes resistance by 1.3785 further up. In the interim, we remain sidelined and await a clearer signal.

British Pound / US Dollar

Weekly Candles

Prepared by Jamie Saettele

Jamie: “In November, the GBPUSD carved out a bearish engulfing pattern. The candle pattern reinforces the bearish interpretation of wave structure in which a large triangle is underway from the 2009 low. Wave d of the triangle is expected to result in weakness towards 14780 over the next few months. 15300 is the next level of interest on the downside (following a break below 15485) followed by 15100 (100% extension).

Joel: The market collapse on Wednesday signals an end to the latest corrective channel out from 1.5595, with the price seen retesting this recent low, and breaking below towards next key support by 1.5295 further down. A lower top looks to be firmly in place by 1.5910, and any intraday rallies are expected to be well capped in the 1.5750 area going forward. Ultimately, only back above 1.5780 gives reason for concern.

Australian Dollar / US Dollar

Weekly Candles

Prepared by Jamie Saettele

Jamie: The specter of a multi-month head and shoulders top remains particularly ominous for AUDUSD bulls. Focus is on 9750 (recent low) and 9700 (former resistance). As is the case with the EURUSD, “bears should be cautious as the monthly low was put in on the first day of the month.”

Joel: After confirming a major head & shoulders top that projects weakness down towards the 0.9100 figure over the shorter-term, the market has since bounced back above parity. However, it is quite common to see such bounces after topping patterns have triggered with the market more often than not inclined to test convictions before ultimately following through with the pattern formation. As such, we would look for a fresh lower top by 1.0030, with a break back below 0.9750 to confirm downside bias and accelerate declines. Ultimately, only a close back above parity would give reason for pause. Wednesday’s reversal reaffirms bearish continuation prospects, with the market ending a sequence of 4 consecutive daily higher lows.

New Zealand Dollar / US Dollar

Weekly Candles

Prepared by Jamie Saettele

Jamie: “The NZDUSD carved out a key reversal in November (and also sports its own head and shoulders top). My preferred wave count treats price action since the October 2009 high as a flat with wave B of the flat either complete now or completing this month. The next large move is lower in wave C to below 6560. The drop below 7400 shifts focus to 7200 and 6950.” Watch the channel for potential support as well.

Joel: The latest break back below 0.7400 confirms a lower top by 0.7670, and should now open a fresh downside extension into the 0.7000-0.7200 area over the coming sessions. From here, look for any intraday rallies to now be well capped ahead of the 0.7500 figure, with only a close back above this psychological barrier to give reason for concern.

US Dollar / Japanese Yen

Weekly Candles

Prepared by Jamie Saettele

Jamie: The rally from the November 1 low is an impulse and the ensuing decline found support at the 50% retracement. A break to a new high would shift focus to Fibonacci extensions of 8650 (100%) and 8900 (161.8%). Look higher.

Joel: Although the market continues to recover with prospects for a material base looking more and more encouraging following the recent break back above the daily Ichimoku cloud, inability to establish any meaningful upside momentum beyond 84.00 suggests that the recovery could be on hold for a bit, with the market now in the process of consolidating. Ultimately however, while the pair holds above 82.00 on a close basis, we retain a constructive outlook. Only a daily close back below 82.00 will negate and open the door for a resumption of the broader underlying downtrend, while a break and close back above 84.40 will mark and end to the consolidation and open a fresh upside extension towards 86.00.

US Dollar / Canadian Dollar

Weekly Candles

Prepared by Jamie Saettele

Jamie:Currently testing its 20 day average as resistance, there has been very little action in the USDCAD since April. Since then, price has traded in a range of 9930 to 10870 with most of the action taking place between 10100 and 10600. A drop below 9929 could complete a corrective B wave from the March 2009 high (watch for support at 9700). Trading above 10375 would be suggestive of a bottom. It is worth noting that 3 month volatility is at its lowest since the end of April (10.62%), which saw the last significant USDCAD low.

Joel:As per our commentary in previous days, setbacks have been very well supported by parity, and the market finally looks like it could be in the process of carving out yet another base. A recent weekly break and close back above 1.0100 confirms bullish outlook, and should now open the door for a fresh upside extension to test next key resistance by 1.0375 over the coming sessions. For now, look for any intraday pullbacks to be well supported above 1.0000. A close back above 1.0300 accelerates.

US Dollar / Swiss Franc

Weekly Candles

Prepared by Jamie Saettele

Jamie: “The decline from the 2008 high of 12300 consists of 2 equal legs and may be wave B of a multi-year flat. The implications are for a powerful rally over the next several months that ends above 12300.” The pronounced divergence with RSI on the daily highlights the USDCHF bullish potential.

Joel: We contend that the market is in the process of carving a material base by 0.9460, and any setbacks should be very well supported in favor of a sustained recovery. The market should now look to rally beyond parity towards our next key topside objective in the 1.0280-1.0500 area over the coming weeks. The 1.0280 resistance represents the highs from September, while the 1.0500 area is the 200-Day SMA. Any intraday setbacks are expected to be well supported ahead of 0.9500. While recent bearish price action certainly threatens recovery outlook, ability to hold above 0.9460 keeps the structure intact.

Euro / Japanese Yen

Weekly Candles

Prepared by Jamie Saettele

Jamie: “The reversal at 10880 (161.8% extension) combined with the potential head and shoulders bottom paints a bullish picture in the weeks ahead.” I wrote Wednesday that “the X wave count above remains preferred but the EURJPY has slowed after reaching its 20 day average and potential channel resistance. As such, traders should exercise more caution that usual with commitments at this juncture.” The EURJPY has sold off and is nearing 10955. The rally from 10955 is in 3 waves and may constitute wave b of a flat. A drop under 10955 may complete the flat pattern prior to the next leg up.

Joel: After spending a short amount of time back below the daily Ichimoku cloud, the market has since recovered and major basing prospects remain intact. Look for a higher low to now be firmly in place by 108.35, with a break back above the top of the cloud in the 113.50 area to confirm upside bias and accelerate gains. For now we remain on the sidelines.

British Pound / Japanese Yen

Weekly Candles

Prepared by Jamie Saettele

Jamie: “5 waves up from 12643 and 3 waves down to 12933 (61.8% Fibonacci) favor GBPJPY bulls. A break above 13420 is expected and objectives are 13710/75 (100% extension and August high) and 14200 (161.8%).” The GBPJPY has pulled back substantially and it now appears likely that 12933 will not hold. However, a drop below may complete a larger correction. Watch 12825 for support (100% extension).

Joel: Although the cross remains locked in a broader downtrend, the latest bounce has been impressive with the market finally breaking above the daily Ichimoku cloud to suggest that we could in fact be on the verge of a major shift in the trend. Look for sustained break back above the top of the cloud, with any setbacks now expected to be well supported above 129.00 on a close basis. A close above 135.00 will reaffirm bullish outlook from here and accelerate gains.

Euro / British Pound

Weekly Candles

Prepared by Jamie Saettele

Jamie: Bigger picture, “the structure from the December 2008 high is a complex correction and one more low (below 8066) would probably complete the large 4th wave.” I wrote last week “I am looking for a c wave rally to exceed 8525…” The EURGBP has exceeded 8525 thus the corrective rally is likely complete (additional strength would encounter resistance at 8565/8700). Look lower. I’ll assess downside objectives as the downtrend matures.

Joel: The market continues to adhere to some major falling trend-line resistance, with the latest topside failure off of the channel top opening an acceleration of declines back below 0.8500. From here the risks are for additional declines over the medium-term with sights set on a move to fresh yearly lows by critical psychological barriers at 0.8000. Ultimately, only back above 0.9000 would negate and give reason for concern, while rallies towards 0.8600 should be sold.