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.)

2/18/2010 – GBP/USD – Price action on GBP/USD, a daily chart of which is shown, has tentatively broken down below an inverted flag pattern consolidation within the context of an overall parallel downtrend channel that has been in place since the mid-November highs.

This tentative flag break hints at continued potential bearishness in the pair in line with the prevailing downtrend. As of Thursday (2/18/2010), the low that was reached on the flag breakdown approached strong established support in the 1.5550 price region, which is the approximate low of the flag pattern, before bouncing back up again.

Any subsequent breakdown below this 1.5550 flag pattern low could target further downside support in the 1.5350 price region and the bottom of the parallel downtrend channel. Significant upside resistance within the context of the current downtrend resides around the 1.5800 price region, which represents the top of the flag pattern consolidation 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.)

2/17/2010 – EUR/USD – As of Wednesday (2/17/2010) price action on EUR/USD, a daily chart of which is shown, has begun to re-assert its bearish stance within the context of the pair’s overall downtrend.

This occurs after price made a swift and strong bullish correction on Tuesday, reaching up to approach significant resistance in the key 1.3800 support/resistance price region. After the bullish correction was rejected from that price area on Wednesday, the pair is potentially poised to resume the downtrend that has been in place since the breakdown of the prior uptrend in early December. A strong breakdown below the 1.3600 price region could initiate a bearish continuation targeting key downside support in the 1.3400 price region.

In the event that this target is hit in the very near future, a new 9-month low will have been established. With continued bearish trend action below 1.3400, further key support to the downside resides around the 1.3100 price region. Upside resistance within the context of the current strong downtrend continues to reside around the noted 1.3800 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.)

2/12/2010 – EUR/USD – Price action on EUR/USD, a daily chart of which is shown, has continued its steeply-angled bearish trend after making yet another bullish correction/consolidation earlier in the week.

This minor bullish correction, in the rough form of yet another inverted flag pattern, was halted just above key resistance in the 1.3800 price region. The current bearish trend continuation has established yet another new 8-month low in the pair after having broken down below the low of the prior week.

Currently, the directional bias continues to be bearish, with the pair targeting key downside support in the 1.3400 price region. Strongly bearish price action that breaks down below the 1.3400 region could, going forward, target further downside support in the 1.3100 price region. Upside resistance within the context of the current steep downtrend continues to reside around the noted 1.3800 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.)

2/11/2010 – USD/CHF – Price action on USD/CHF, a daily chart of which is shown, has been following a steep uptrend support line since the mid-January lows.

Within this steep uptrend, the bearish corrections have been relatively shallow while the bullish trend moves have been relatively strong. Currently, price is in the process of recovering from a bearish correction, and appears poised to reach for a new 6-month high if the last high around 1.0817 is surpassed.

In this event, dynamic resistance immediately to the upside resides around a longer-term downtrend resistance line extending from the November 2008 high. A further resistance target to the upside resides around the key 1.1000 price region. If price is unable to sustain the noted steep uptrend, key downside support currently resides around the 1.0600 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.)

2/09/2010 – EUR/JPY – Price action on EUR/JPY, a daily chart of which is shown, has reached down and made a tentative bounce off key support in the general 122.00 price region.

This occurs after the currency pair broke a long sideways consolidation by breaking down below another key support level in the 127.00 price region. The substantial recent bearishness in the pair established a new 11-month low late last week before making the current tentative bounce.

Despite the bounce, price action is currently following a very steep medium-term downtrend extending from the mid-January highs. Going forward, the bearish bias could very well continue to prevail. With any strong breakdown and close below the noted 122.00 support region, an immediate downside support target resides around the 119.50 price region.

Below that resides key further support around 116.00. Upside resistance within the context of the current steep downtrend resides around the 124.70 price region, which represents the bottom of the last consolidation within the downtrend.

(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.