TECHNICAL ANALYSIS MAJOR US DOLLAR RATES - FEATURED MARKET – EUR/USD.
EUR/USD extended losses from the all-time high of 1.6039 in July 2008 beyond the 1.2329 / 1.2459 double bottom seen in October 2008 / March 2009 to reach 1.1881 in June 2010, from where a two-legged recovery to 1.4280 (November 2010) & 1.4940 (May 2011) occurred. Although the downtrend line connecting the 2008 & 2009 peaks was breached on the clearance of the initial high at 1.4280, confirmation of the upside break by a subsequent development of rising lows was never forthcoming and instead a multi-month top pattern was then traced out. This was completed by the breakdown through 1.3838- 1.3971 in early September, with losses to 1.3150 in early October having been followed by a lower top at 1.4245. A potential head & shoulders top pattern
has been traced out above a 1.2874-1.3150 neck-line, with MACD having already moved back into negative territory to indicate a downtrend.
Support has far
emerged at the head & shoulders neck-line, suggesting the possibility of an initial bounce but we ideally need to see a lower top develop by former support at 1.3838- 1.3971 ahead of a breakdown towards the (January) 2011 low at 1.2874, with 1.2590-1.2603 (August 2010 higher low / 76.4% retracement of 1.1881- 1.4940) and the long-term uptrend connecting .8566 & 1.1881 (now at 1.2475, rising .0007-.0008 per week) the next major targets below there. An eventual loss of the .8566-1.1881 uptrend line and former key support at 1.2329 (2008 low) will be longer-term bearish.
FX
MAJOR TRENDS AND TARGETS FOR US DOLLAR MAJORS As at 09 December EUR/USD GBP/USD USD/JPY USD/CHF USD/CAD AUD/USD
Current level 1.3350 1.5650 77.70 .9230
1.0235 1.0130
Major trend Sideways Sideways Down Down Down Up
Major target
67.53 & 62.07 .7726 & .7071 .9061 & .8073
1.1460 & 1.1890
Trend change level 1.2874 / 1.4546 1.4783 / 1.7041 85.53
1.0066 1.0854 .9397
FX TRADER MAGAZINE January - March 2012 83
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