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; 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.

(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.)

1/22/2010 – EUR/JPY – Price action on EUR/JPY, a daily chart of which is shown, has descended all the way down to reach and dip below key support around the 127.00 price region.

This occurs within the context of a prolonged sideways trading range that the pair has been entrenched in since at least mid-2009. Currently, bearishness in the euro against the yen has been a prevailing theme for more than a week. In the process, price has just hit a fresh 9-month low with even further bearishness likely.

A strong breakdown and daily close significantly below the noted support around 127.00 could potentially indicate additional bearish pressure targeting further downside support targets. A key longer-term bearish target resides around the 122.00 price region. In the event that the sideways trading range remains intact with a bounce up off support, a key upside resistance target within the trading range resides around the 131.50 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.)

1/21/2010 – USD/CAD – After rebounding off support in the 1.0200 price region late last week, USD/CAD (a daily chart of which is shown) has reflected strong dollar-strengthening in the past couple of days by breaking out above several key resistance areas. This includes the 1.0400 price region that was just broken on Wednesday.

Currently, as of early Thursday (1/21/2010) New York session, the pair is still experiencing some bullishness, possibly targeting a key downtrend resistance line extending from at least August of 2009. Still within the bounds of this gradual downtrend, USD/CAD is now in correction mode, a bear market rally.

Unless the downtrend line is broken out substantially to the upside, the current prevailing downtrend should continue to be valid. And any subsequent breakdown below the 1.0400 price region should re-target the noted support around 1.0200. Any further breakdown below that support could continue down to target parity around 1.0000, and would confirm a downtrend continuation for this pair.

(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.)

1/20/2010 – EUR/USD – Price action on EUR/USD, a daily chart of which is shown, has made a marked breakdown of a bearish continuation flag pattern that previously appeared to be on the verge of becoming invalidated.

After the false upside tests of last week (which reached up to the key 38.2% Fibonacci retracement level of the initial downtrend run), price dropped substantially to break the flag to the downside, fulfilling the pattern’s customary role as a trend continuation formation.

With the consolidation finally broken, the current directional bias is towards a continuation of the new downtrend, which could target further downside support in the 1.3800 price region. Upside resistance within the context of the continuing bearish trend resides in the 1.4450 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.)

1/19/2010 – USD/JPY – Price action on USD/JPY, a daily chart of which is shown, has displayed marked bearishness for more than a week, since the top of a parallel downtrend channel was reached and respected in early January.

In the course of this bearishness, price broke down below a key intra-channel uptrend support line extending from the late November lows. After that breakdown, price has continued to descend down to a key support region around the 90.50 area. Currently, the pair has made a tentative bounce up off this support region.

Any subsequent breakdown below this support area could lead to further bearishness targeting support in the 88.00 price region. To the upside, the top border of the noted parallel downtrend channel should continue to serve as dynamic resistance in the event that price extends its current support bounce.

(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.)

1/18/2010 – GOLD – Price action on spot gold, a daily chart of which is shown, has formed a potentially bullish pennant consolidation pattern within the context of its rebound off December lows.

This rebound is represented by a short-term uptrend support line extending from the December 22 support low around 1074. This all occurs within the context of an overall, continuing uptrend. Any significant breakout above the pennant consolidation could signify a potential recovery in gold and an uptrend continuation that could ultimately target further resistance around the 1225 all-time high.

Any significant breakdown below both the noted short-term uptrend support line and the pennant pattern could target downside support in the noted 1070-74 support/resistance price region. Any substantial breakdown below that support level could place the current long-term uptrend in jeopardy.