Chart Of The Day | Forex Chart Analysis | James Chen

(Chart key: price on 1st pane, Stochastics on 2nd pane; horizontal support/resistance levels in black; uptrend lines in green; downtrend lines in red; 50-period simple moving average in orange; 100-period simple moving average in brown; 200-period simple moving average in dark blue; Fibonacci levels in magenta.)

USD/JPY (4-hour chart) as of Monday (6/27/2011) has broken out of a symmetrical triangle consolidation pattern extending back to the end-of-May high, which resides within a larger consolidation that has been in place for the last two months.

The current triangle consolidation breakout has not been particularly strong, but it represents a bullish indication that hints of further bullishness potentially to come.

In the event of a strong subsequent breakout above resistance around the 81.00 price region, followed by a breakout above the next downtrend resistance line to the upside (which represents the top of the larger consolidation), the key upside resistance target resides around the 83.00 price region.

(Chart key: price on 1st pane, Stochastics on 2nd pane; horizontal support/resistance levels in black; uptrend lines in green; downtrend lines in red; 50-period simple moving average in orange; 100-period simple moving average in brown; 200-period simple moving average in dark blue; Fibonacci levels in magenta.)

GBP/USD (daily chart) as of Thursday (6/23/2011) has made a swift and strong breakdown below multiple support levels, indicating a potential trend change for the pair after confirming a breakdown of the longstanding bullish support trendline that was in place since the May 2010 lows, more than one year ago.

The initial target on this breakdown resided around the key 1.6000 psychological support/resistance region, but price action has gone on tentatively to drop below this important level. The directional bias on GBP/USD, therefore, continues to be bearish with a key further downside support target around the 1.5750 price region.

(Chart key: price on 1st pane, Stochastics on 2nd pane; horizontal support/resistance levels in black; uptrend lines in green; downtrend lines in red; 50-period simple moving average in orange; 100-period simple moving average in brown; 200-period simple moving average in dark blue; Fibonacci levels in magenta.)

USD/CHF (daily chart) as of Monday (6/20/2011) has completed yet another bullish retracement within the context of a steep bearish trend that has been in place for over a year, since the June 2010 1.1730 area high. This retracement brought price action back up to the key 0.8550 resistance (prior support) before turning back down.

Prior to this bullish retracement, price had reached its downside target around 0.8325 (the new all-time low), which represented the 161.8% Fibonacci extension of the last bullish retracement that occurred in the first half of May. In the event of a breakdown below that all-time low, which would confirm a downtrend continuation, bearish price momentum could potentially begin targeting key psychological support around the 0.8000 round number.

To the upside, the noted 0.8550 level should continue to serve as resistance within the context of the current long-standing bearish trend.

(Chart key: price on 1st pane, Stochastics on 2nd pane; horizontal support/resistance levels in black; uptrend lines in green; downtrend lines in red; 50-period simple moving average in orange; 100-period simple moving average in brown; 200-period simple moving average in dark blue; Fibonacci levels in magenta.)

AUD/USD (daily chart) as of Friday (6/17/2011) has consolidated into a large triangle pattern after descending along a bearish resistance trend line extending back to the all-time 1.1010 high hit in early May. The bottom border of the triangle resides around the 1.0440 price level.

This triangle consolidation occurs within the context of a year-long uptrend extending back to the June 2010 low around 0.8080. Price action is currently progressing towards the triangle apex, and a strong breakout could be imminent. In the event of a continuation pattern breakout to the upside, in the direction of the prevailing trend, the key upside target is clearly a re-test of the 1.1000 area resistance high.

In the event of a break to the downside, which would extend the bearish correction from the all-time high, downside support resides around the key 1.0200 support region.

(Chart key: price on 1st pane, Stochastics on 2nd pane; horizontal support/resistance levels in black; uptrend lines in green; downtrend lines in red; 50-period simple moving average in orange; 100-period simple moving average in brown; 200-period simple moving average in dark blue; Fibonacci levels in magenta.)

GBP/USD (daily chart) as of Thursday (6/16/2011) has made a tentative breakdown below a key uptrend support line extending back to the May 2010 lows. This breakdown is a key bearish event that, if sustained, could mean a bearish trend change for the pair.

This occurs after a general period of overall bearishness stemming from the establishment of the 1.6745 high back in late April. The immediate downside target on this breakdown continues to reside around the important 1.6000 psychological support/resistance level.

In the event of a breakdown below 1.6000, which would confirm a bearish trend change, the key support target further to the downside resides around the 1.5750 price region. To the upside, resistance within the context of the current bearishness resides around the 1.6300 price region.

(Chart key: price on 1st pane, Stochastics on 2nd pane; horizontal support/resistance levels in black; uptrend lines in green; downtrend lines in red; 50-period simple moving average in orange; 100-period simple moving average in brown; 200-period simple moving average in dark blue; Fibonacci levels in magenta.)

6/15/2011 – GBP/USD (daily chart) as of Wednesday (6/15/2011) has dropped significantly down to hit a key long-term uptrend support line extending back to the May 2010 lows. This occurs after price action respected a short-term downtrend resistance line extending back to the late April high.

Currently, bearish momentum is strong and has reached a critical juncture. A breakdown below the long-term trendline has a key downside target around the psychologically important 1.6000 support/resistance level. To the upside, the important 1.6300 price level should now act as key resistance within the context of the current bearishness.

(Chart key: price on 1st pane, Stochastics on 2nd pane; horizontal support/resistance levels in black; uptrend lines in green; downtrend lines in red; 50-period simple moving average in orange; 100-period simple moving average in brown; 200-period simple moving average in dark blue; Fibonacci levels in magenta.)

6/13/2011 – Gold (daily chart) as of Monday (6/13/2011) has dropped back down to hit a key uptrend support line extending back to the January low around 1308. This occurs after price hit a high of 1553 one week ago, which failed to re-test the 1575 all-time high that was reached in early May.

The near-term directional bias currently appears bearish in line with this price failure, and a larger bearish correction could soon be due. With price currently right at the noted uptrend support line, a significant breakdown below this line could trigger the correction.

In this event, a key initial downside support target resides around the 1475 price region, which represents both a prior support/resistance level as well as the 38.2% Fibonacci retracement of the last major bullish trend run (from the January 1308 low to the May 1575 all-time high).

(Forex chart key: price on 1st pane, Stochastics on 2nd pane; horizontal support/resistance levels in black; uptrend lines in green; downtrend lines in red; 50-period simple moving average in orange; 100-period simple moving average in brown; 200-period simple moving average in dark blue; Fibonacci levels in magenta and purple.)

**Welcome Back to James with the NEW Chart of the Day! Have a great weekend everyone!

6/10/2011 – EUR/USD (daily chart) as of Friday (6/10/2011) has continued its bearish stance of the last two days after attempting but failing to break 1.4700 to the upside earlier in the week. This continued bearishness now constitutes a bonafide breakdown of the steep uptrend that has been in place since late May.

A key downside support target on this breakdown resides around the 1.4250 price region, which is not only an important prior support/resistance level, but also the 61.8% Fibonacci retracement level of the two-week bullish run from the lows around 1.4000 to the highs around 1.4700.

In the event of continued bearish momentum that further breaks down below the noted 1.4250 support, the key downside target to watch is clearly around the 1.4000 psychological level, which has served as an exceptionally strong support/resistance level and price target in the recent past.

(Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; chart patterns in white; 50-period simple moving average in light blue.)

5/19/2011 – GBP/USD – Price action on GBP/USD (a daily chart of which is shown) as of Thursday (5/19/2011) has continued its strongly bearish bias that has been in place since the beginning of May, when price turned down from its long-term high just under the 1.6750 region.

After retreating from that high in the beginning of May, price has made a substantial bearish correction that has dropped below several important support levels, including two key bullish support trendlines. Currently, price action is descending to approach a longer-term uptrend support line extending back to the mid-2010 long-term lows.

The pair is also looking to target key downside support around the important 1.6000 psychological level. In the event of a breakdown below both the noted long-term uptrend support line and this 1.6000 level, GBP/USD could move towards a possible trend reversal to the downside. In this event, an initial downside support target resides around the 1.5700 support/resistance price region.

(Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; chart patterns in white; 50-period simple moving average in light blue.)

5/09/2011 – EUR/USD – Price action on EUR/USD (a daily chart of which is shown) as of Monday (5/09/2011) is on its way to a third significantly bearish day, furthering its bearish stance from the latter part of the last week and approaching key support around the 1.4250 price region.

This occurs after price action on Friday made a strong and swift breakdown below a key support confluence that included both the important 1.4500 price region and the steep uptrend support line extending back to the low at the beginning of the year.

A further breakdown below the current 1.4250 support region would give further evidence of a potential change in the previous bullish trend, and could target key psychological support around the important 1.4000 support/resistance price region.