Chart Of The Day

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

2/08/2010 – GBP/USD – Price action on GBP/USD, a daily chart of which is shown, has finally begun to show a bearish emergence from the sideways consolidation that has characterized this currency pair on a long-term basis for several months now.

A clean breakdown below the 1.5700 support region last Friday represented a tentative breakdown below the consolidation, in line with a medium-term downtrend that has been in place since mid-November 2009. In the process of this breakdown last Friday, the pair has established a new 8-month low near the bottom of the noted medium-term parallel downtrend channel.

The current bearishness appears likely to extend to the current week. A further downside support target resides in the 1.5350 price region, with yet further support for the move down around 1.5200, which represents the 161.8% Fibonacci extension of the bearish price run from the 1.6875 high (11/16/2009) to the 1.5830 low (12/30/2009).

Tentative upside resistance for any bullish correction within the context of the current downtrend resides first around the noted 1.5700 support/resistance price region, and then further up around the 1.5850 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.)

2/05/2010 – EUR/USD – Price action on EUR/USD, a daily chart of which is shown, has displayed continued marked bearishness recently, strongly confirming a new downtrend in the pair.

This new downtrend was initiated after the previous long-term uptrend was broken decisively to the downside in early December. After that breakdown, the bearish trend has been characterized by several short-term bullish retracements and consolidations in the form of inverted flag patterns, but each time these trend interruptions were broken strongly to the downside.

Having dropped below several important support levels, including the 1.4000 psychological price region and the key 1.3800 level, price has now reached a new 8-month low. Currently, a key support target to the downside resides in the 1.3400 price region. Upside resistance within the context of the strong bearish trend resides around the noted 1.3800 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; 50-period simple moving average in light blue.)

2/03/2010 – AUD/USD – Price action on AUD/USD, a daily chart of which is shown, continues to languish in a sideways consolidation, although the last couple of weeks have been decidedly bearish for the pair.

After price reached strong resistance around 0.9325 in mid-January (just shy of the 15-month high around 0.9400 that was hit in mid-November 2009), the directional bias has been steeply bearish, forming a well-defined short-term downtrend resistance line. In the process of this bearishness, the pair has fallen below 0.8950 region support, and has approached further support in the 0.8730 price region, which was the level of the last major low hit in late December.

With continued bearishness in the pair that breaks down below the 0.8730 price region, the current sideways consolidation will have been broken, with a possible new downtrend in the making. In this event, further key support to the downside resides in the 0.8500 price region. Upside resistance within the context of the current bearishness resides around the noted 0.8950 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; 50-period simple moving average in light blue.)

2/02/2010 – EUR/USD – Price action on EUR/USD, a 4-hour chart of which is shown, has made yet another bullish retracement within the context of the new overall downtrend.

The current leg of this new downtrend extends from the January 13th high, and has formed a valid bearish resistance trendline. Within the context of this downtrend resistance line, price has made several breakdowns of both short-term uptrend support lines and horizontal support levels. As might be expected, these breakdowns have continued the dominant downtrend with significant downside follow-through. If the current leg of the prevailing downtrend is to continue, a key continuation trigger would be a breakdown below the current short-term uptrend support line.

A significant breakdown of this nature could target further downside support in the 1.3800 price region. To the upside, within the context of the current overall downtrend, in the event of any significant breakout above the current downtrend resistance line, the key 1.4000 psychological price region should serve as an immediate resistance area.

(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.)

2/01/2010 – Silver – Price action last week on spot silver, a daily chart of which is shown, broke down below a rough head & shoulders pattern neckline as well as key support in the 16.70 price region.

At the end of last week, price had reached the noted downside support target of 16.00, approaching the bottom support border of a key parallel uptrend channel. With a good bounce to begin this new week, silver has tentatively respected the 16.00 support level. Short-term upside resistance on this bounce tentatively resides, once again, in the 16.70 price region. However, the bearishness of the past couple of weeks in the spot metals may not be over just yet.

In the event of a subsequent breakdown below the noted 16.00 support level, immediate dynamic support to the downside resides around the noted bottom border of the overall parallel uptrend channel. Any further breakdown below that bottom support border would place the current uptrend in jeopardy, with a further downside support target in the immediate 15.00 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.)

1/29/2010 – GOLD – Recent bearish price action on spot gold, a daily chart of which is shown, has descended all the way down to key support around the 1070 price region, forming a tentative double bottom matching the late December low.

In the process, price has also reached down to an important uptrend support line that has defined the gold uptrend for at least well over a year. At the current critical support juncture, gold continues to display a marked bearish bias that threatens to change, or at least interrupt, the longstanding uptrend.

In the event of any significant breakdown below the uptrend support line and the noted 1070 support, a key downside support target resides in the 1025 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.)

1/28/2010 – EUR/USD – Price action on EUR/USD, a daily chart of which is shown, has finally made a tentative breakdown below the 1.4000 support/resistance and psychological barrier, establishing a new 6-month low for the pair.

This occurs after a slight bullish retracement that occurred several days ago which formed a small flag-like consolidation pattern. The current tentative bearish breakdown indicates a potential continuation in the new overall downtrend that began after the previous long-term uptrend was broken to the downside in early December. With further bearishness helped out by a daily close below 1.4000, the key downside support target currently resides in the 1.3800 price region.

On a longer-term basis, continued bearishness that falls below 1.3800 could target key support in the 1.3400 price region. To the upside, in the event of any bullish pullback, the 1.4200 price region should provide strong resistance within the context of the current overall downtrend.

(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.)

1/27/2010 – USD/JPY – Price action on USD/JPY, a daily chart of which is shown, has recently displayed a clear continuation of the overall downtrend that has been in place since April 2009.

This downtrend has manifested itself as a well-formed parallel downtrend channel. After reaching the top of the channel in early January, and then reversing and breaking down below an important intra-channel uptrend support line extending from the late November lows, price stalled just above key support in the 90.50 price region. After breaking down below this support late last week, the pair has continued its bearish stance into this week.

Currently, the next major downside target resides around the 88.00 price region. Upside resistance within the context of the current overall downtrend resides around the noted 90.50 price region. If further bearishness is able to reach down and break below 88.00, the pair could continue to drop, potentially targeting further support around 86.00 and towards the bottom border of the parallel downtrend channel.

(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.)

1/26/2010 – AUD/USD – Price action on AUD/USD, a daily chart of which is shown, has descended back down to hit key support around the 0.8950 price region before retreating back up.

This occurs within the context of an overall sideways consolidation, after price reached strong resistance around 0.9325 in mid-January (just shy of the 15-month high around 0.9400 that was hit in mid-November 2009). Currently, U.S. dollar strength appears to be exerting some general downside pressure on this currency pair, pushing it towards a potential new downtrend, much like what currently appears to be occurring with EUR/USD.

A strong breakdown and close below the noted 0.8950 support could target further key support around the last major low in the 0.8730 price region. Any further breakdown below that level should confirm a bearish continuation that could signal a new downtrend in the pair. Upside resistance within the current trading range consolidation continues to reside around the noted 0.9325 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.)

1/25/2010 – SILVER – Price action on spot silver, a daily chart of which is shown, took a steep dive for most of last week after reaching resistance around the 18.80 price region. Price at that level approached, but fell short of, the 19.40 region long-term high that was reached in early December 2009.

Currently, the price decline of last week has brought silver down to approach key support in the 16.70 price region. In the process, it has also formed the rough pattern of a head-and-shoulders formation, with price currently around the region of the neckline. Any substantial breakdown below both this neckline and the noted 16.70 support region could indicate further bearishness going forward.

In this event, an immediate support level to the downside resides around the 16.00 price region, with additional dynamic support residing around the bottom border of the long-term parallel uptrend channel. To the upside, a pronounced bounce up off the current support should target resistance around the 18.00 price region.