USD/JPY - Bullish against 101.50, Targeting 105.15
Bucking negative sentiment towards the dollar following last Friday’s NFP, USDJPY broke out of the range between 100.70 and 98.50 to extend above multi-year support-turned resistance at 101.50. The level has only been tested twice prior to this year, once in 1999 and again in 2005. On both previous occasions, the test sparked a protracted multi-year rally. The level gave way March as USDJPY pushed to a low of 95.71. Last week’s trading established the pivotal level as support once again, with USDJPY consolidating below the 38.2% Fib of the 12/27/07-03/17 decline at 102.89. Our bias has shifted to bullish, seeing USDJPY break through current resistance to test the 50% Fib at 105.15.
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USD/CHF - Bearish below 1.0100, Targeting 0.9840
The move below 0.9840 did not materialize last week. Rather, USDCHF continues to oscillate between the 38.2% Fibonacci retracement of the 02/14-03/17 decline at 1.0196 and the record-lowest close at 0.9840. With no substantial evidence to change our stance, we remain bearish looking for a return to the current range’s lows.
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USD/CAD - Bullish against 1.0120, Targeting 1.0250
Last week’s bearish bias proved correct, though the decline was not as deep as we anticipated. USDCAD was rejected once again from the top of the long-term 0.9793-1.0250 range (established in August of last year) and declined to the 50% Fibonacci retracement of the 01/22-02/28 down leg at 1.0041. We now notice an upward-sloping trend line connecting recent lows and adding further support near the 50% Fib level. USDCAD rallied from this area above the 61.8% retracement at 1.0120 to find itself in at the bottom of a familiar range, the very same one it had occupied since 03/20. From here, it seems trading will move up to once again find itself at the larger range’s upper boundary.
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AUD/USD - Bullish against 0.9287, Targeting 0.9500
Having bounced from support at the long-term trend line established on 08/17/07 as of the writing of last week’s report, AUDUSD returned to that support having failed to build momentum through Fibonacci resistance levels at 0.9157 and 0.9222 (38.2% and 50% of the 02/29-03/20 decline, respectively). On a second bounce from the trend line, AUDUSD overcame the aforementioned hurdles and is now testing the 61.8% Fib level at 0.9287. Should this resistance give way, we see the pair rallying back to test 0.9500. On balance, we may see yet another retracement to support before this Fib gives in. Regardless, our bias continues to favor the upside.
Attached Imageshttp://www.learncurrencytrading.com/fxforum/attachment.php?attachmentid=13196&stc=1&d=1207718435
NZD/USD - Bullish against 0.7902, Targeting 0.8100
Last week’s bearish bias proved short-lived. While NZDUSD declined past the 38.2% Fibonacci retracement of the 01/22-02/27 rally at 0.7902, the decline was halted at the intersection of the 50% Fib level at 0.7804 and the upward-sloping trend line established in September of last year. Spending a bit of time ranging between the nearest retracement levels, the pair mounted a top-side brake as USD optimism waned and risk appetite returned to the market. This places NZDUSD between the boundaries of last month’s range between 0.7902 and 0.8217. In the near term, we see the pair oscillating upwards to test the 0.8100 level.
Attached Imageshttp://www.learncurrencytrading.com/fxforum/attachment.php?attachmentid=13197&stc=1&d=1207718474
EUR/GBP Setting up to Move Higher
After the Bears were rejected at the 7869 level, EUR/GBP bulls have been empowered to push prices higher. A close above the .7898 level will open up the 127% extension target of .7910 and the 161.8% extension target of .7927.
I usually like looking at longer term charts as they provide more profit potential.
This chart illustrates how Fibonacci price extensions can be used on shorter time frames like the 30 minute chart.
See the attached chart:
~Greg
Attached Imageshttp://www.learncurrencytrading.com/fxforum/attachment.php?attachmentid=13007&stc=1&d=1207170154
EURO Kiwi poised to push back into the 2.000 Area
After a 3 day decline from a multi-week high of 2.0177 on March 31st to a low of 1.9691 on April 2nd, EURNZD found strong support at the 38.2% Fibonacci retracement. Good buying at this level at a break of the 1.9901 level should open up the 2.000 and 2.0100 area. A stop could be placed at the 19684 area just below the wick of the pseudo-hammer with a target of at least double the stop; this would be considered good money management. In addition, cost of the stop in terms of pips should never exceed 5% of your total account equity. Professional traders preserve capital first before entering a trade.
See the attached chart.
Attached Thumbnailshttp://www.learncurrencytrading.com/fxforum/attachment.php?attachmentid=13012&stc=1&thumb=1&d=1207176615
EUR/GBP spiked within 3 pips of the 127% extension target before selling off dramatically. Disappointing Eurozone retail sales that came in at -.5% vs. .2% expected seems to be the factor in EURO weakness across several pairs.
See the attached chart.Attached Imageshttp://www.learncurrencytrading.com/fxforum/attachment.php?attachmentid=13048&stc=1&d=1207248941
This is a follow up to the trade set up on the EUR/NZD posted on April 2nd. Where price bounced up strongly from a 38.2 fibonacci extension of the swing from 1.8962 to 2.0179. An entry BUY placed a few pips above the 1.9900 area with a stop placed below the 38.2% Fibo support with a Limit placed in the 2.0100 area.
The risk reward was not that great at .85:1 ( risking 200 pips to make 170. We usually want to look for a minimum reward to risk of 2:1.
We came out a winner on this particular trade. However a series of losers with this same risk to reward ratio would soon make it difficult make a comeback.
This trade showed a good technical set up. But remember, not all good technical set ups are "good" in terms of money management; this is the paradox.Attached Imageshttp://www.learncurrencytrading.com/fxforum/attachment.php?attachmentid=13069&stc=1&d=1207321774
USD/JPY set to target 93.36 area
The US dollar looks poised to retest and take out the March 16th low of 95.71 after a further weakeness in the US economy as indicated by Friday's NFP report.
Japanese traders were on holiday Friday, so look for them to join in the global chorus to sell the dollar.
The March 4th 104.16 swing high to the 3/16/08 low has been followed by a counter trend rally to the 103.00 area. Price has stalled and failed to push past the 103.00 resistance area. This is the 78.6% retracement of the down swing.
Failure to press higher opens the door wide open for dollar bears to push USD/JPY past the 3/16/08 low of 95.71 and to 93.36 the 127% extension target of the down swing. Stops placed around the 103 area with Limit in the 93.36 target zone would create a 5.8:1 reward to risk ratio for this trade.
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Attached Imageshttp://www.learncurrencytrading.com/fxforum/attachment.php?attachmentid=13087&stc=1&d=1207368571
GBP/CHF plows lower
GBP/CHF attempted to stage a rally from the 1.9889 area only to be rejected by sellers at the 2.000 handle which is the 38.2% fibonacci level of the 2.0191-1.9889 swing.
Prices look to be headed to the 1.9800 area. A resurgence of risk aversion ahead of Fridays G-7 meeting of central bankers in Washington D.C.
Traders will look for any mention of intervention to prop up the dollar.
Attached Thumbnailshttp://www.learncurrencytrading.com/fxforum/attachment.php?attachmentid=13190&stc=1&thumb=1&d=1207704604
GBP/CHF continues to plod lower exceeding our target of 1.9800 down to a low of 1.9721 before retracing to the 1.9777-89 area. This represents a 23.6 Fibonacci retracement of the 2.000 to 1.9721 down swing on 4/8-4/9.
Further losses are expected to the 1.9699, 1.9644 and the 161.8% ext. target of 1.9544 is possible.
See the attached chart.
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GregAttached Thumbnailshttp://www.learncurrencytrading.com/fxforum/attachment.php?attachmentid=13218&stc=1&thumb=1&d=1207778254
Shooting Star at 50% Fibo Marks End to GBP/AUD Rebound
GBP/AUD rally from the March 8th low at 2.1096 to an interday high of 2.1311 terminated at the 50% Fibonacci resistance level of the 2.1506-21097 swing.
A break of the upward red counter-trend red line would open up the old low of 2.1096 and the 127% extension target of 2.0985.
The BOE rate decision hangs in the balance. A cut in their overnight lending rate from 5.25% to head-off a US like recession might be in the cards. This could widen the interest rate differential between the Sterling and Aussie.
This may lead to support further decline in the GBP/AUD.
Refer to the attached chart
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Disappointed GBP/USD Bulls Abandon Rally
The much anticipated Bank of England rate decision cut their overnight lending rate 25 basis points from 5.25% to 5.00%. This is what the market expected but there was some hope by some that rates would remain unchanged with a comment about inflation risks. Apparently, the risks to growth are currently greater than maintaining price stability.
What is significant from a Fibonacci standpoint is the failure of the GBP/USD to close above strong resistance at the 61.8% level of 1.9819 from the 1.9924-19650 downswing.
Initial target is the old low with stops above the 1.9848 level.
A break below 1.9650 opens up 1.9400 area
Attached Thumbnailshttp://www.learncurrencytrading.com/fxforum/attachment.php?attachmentid=13250&stc=1&thumb=1&d=1207846474
EUR/USD Poised to move higher
The failure of the ECB to cut rates is bullish as the rate differential between the US rates and Europe remain unchanged. Strong economic data coming out of France only removes fears that an appreciating Euro has slowed growth.
EUR/USD fell from a high of 1.5912 to trend line support at 1.5727. This represents the 38.2% retracement of the 15509-15912 swing.
The daily trend is up, so looking for opportunities to trade in the direction of the trend is the order of business. We usually like looking at the 4 hour or 60 minute chart to find these oportunities.
Hourly indicators are oversold and we could see a retest of the 15912 area before moving higher. Tight stops in the 1.5703 area should be set given the hightened even risk.
The G7 meeting in Washington DC could be a significant event risk as central bankers may be called upon to support the dollar. If this event becomes a non-event by the second day, then expect continuation of the previous weeks trend
Attached Thumbnailshttp://www.learncurrencytrading.com/fxforum/attachment.php?attachmentid=13294&stc=1&thumb=1&d=1207922322
AUD/CHF Heading South- 9180 target
AUD/CHF has rallied from the lows of .9180 only to be stopped cold by overhead supply found a the .618 Fibonacci resistance level of the .9337- 9177 swing.
Prices look to revisit this .9180. If we can close below that area, look to .9077 to be in play.
Only a close above the .9280 level would stop the bear attack.
Refer to the attached 60 minute chart.
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Look for CADJPY rally to reverse.
The Canadian Yen, CAD/JPY down trend struggles to get over last weeks high set on April 11th at 100.61.
Momentum seems to be slowing in at the 100.56 area which is also the 61.8% Fibonacci level of the 102.26-97.91 swing. There is also a daily trend line (red) near that area as well. See the attached chart.
Stops placed above the 102.26 high provides a low risk protection for Shorting CAD/JPY at the 100.56 area that first targets the 98.82 area and then the 97.16 area would create a 2:1 risk to reward ratio.
See the attached chart
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Fibonacci should be drawn in both directions to explore the possibility that we may be wrong about price direction.
In your example, the GBPUSD failed to hold the support levels. When you draw Fibs from the other direction, you can see how price was rejected at the 78.6% Fibonacci Resistance level.
See the attached 30 minute chart:Attached Thumbnailshttp://www.learncurrencytrading.com/fxforum/attachment.php?attachmentid=14048&stc=1&thumb=1&d=1209518032
Would it be correct to say that once price breaks through the previous swing low used as a base for Fibonacci projections then the new low and previous swing high failure is then taken as the low and high for the next retracement level projections?
Here are 2 charts to graphically demonstrate what I mean:-
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Usdchf Major Reversal
I am more of a long term trader... Here is a look at USDCHF on the weekly chart... The pair has formed a hammer right on the 161.8 fibonacci level after a major down trend... I believe this is a Large Bottom forming and price will eventually start heading upward...
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IlyaAttached Thumbnailshttp://www.learncurrencytrading.com/fxforum/attachment.php?attachmentid=13789&stc=1&thumb=1&d=1208896186
The Fibonacci weekly is published weekly on Tuesday morning on the DailyFX.com homepage.
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New reports are released every Tuesday morning.
Ilya
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New reports are released every Tuesday morning.
Ilya
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IlyaAttached Thumbnailshttp://www.learncurrencytrading.com/fxforum/attachment.php?attachmentid=14121&stc=1&thumb=1&d=1209610987
My analysis basically breaks the EURUSD rally into two parts, from 1.4434-1.5900 and then from 1.5345-1.6019.
EURUSD price action from 02/08 – 03/17 marks the start of the first leg of the rally. This move established 1.59 as resistance, a level that would become a triple top before the feeble run at the 1.60 level. Following this rally EURUSD sold off from 1.59 to 1.53 before resuming its rise at a different slope.
The 23.6% Fib of the first leg was also the site of the most recent pause in the EURUSD's decline after a major trend reversal. The level was validated yet again as support today.
Keep in mind, there is nothing technically wrong with including the entire rally in drawing a Fib. Technical analysis is subjective, so different people can see these charts differently but both come up with profitable trades.
Hope that answers your question.
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IlyaAttached Imageshttp://www.learncurrencytrading.com/fxforum/attachment.php?attachmentid=14162&stc=1&d=1209713654
Ilya
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