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.)

1/15/2010 – USD/CAD – Price action on USD/CAD, a daily chart of which is shown, has approached a strong support area in the 1.0200 price region, which represents the long-term 14-month low hit in October 2009.

This approach of key support occurs within the context of an overall downtrend in the pair. As of early Friday (1/15/2010) New York session, price has tentatively made a bounce up off this support. Significant upside resistance for this bounce resides around the strong support/resistance area just above the 1.0400 region.

On any substantial breakdown below the noted 1.0200 support, a 17-month low will have been established, with the key downside support target residing around parity in the 1.0000 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.)

1/14/2010 – AUD/USD – Price action on AUD/USD, a daily chart of which is shown, continues to display some robust bullishness on its sustained rebound off the late-December low.

This rebound has broken out above several resistance levels, including a short-term downtrend resistance line extending from the 15-month high around 0.9400 that was hit in mid-November. Currently, price has once again revisited strong resistance in the 0.9325 price region, just short of the noted 0.9400 long-term high.

If the current bullishness continues on to breakout above the current resistance and that 0.9400 high, price will have established a new 17-month high and could subsequently target further key resistance in the 0.9650 price region. To the downside, a breakdown below the most recent short-term uptrend support line extending from the late December low could target strong intermediate support in the 0.8950 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.)

1/12/2010 – AUD/USD – Price action on AUD/USD, a daily chart of which is shown, has made a swift rebound after breaking down below a long-term uptrend in late November.

This rebound has brought the pair close to the 15-month high around 0.9400 that was hit in mid-November. In the course of the recent bullishness price has broken out above several resistance levels, including a short-term downtrend resistance line extending from the 0.9400 high, and has tentatively defied speculation that a new downtrend is in the making. From an overall trend perspective, price is now essentially in a consolidation after having broken the long-term uptrend.

If the current bullishness continues on to breakout above the noted 0.9400 high, price will have established a new 17-month high and could subsequently target further key resistance in the 0.9650 price region. To the downside, a breakdown below the most recent short-term uptrend support line extending from the late December low could target strong intermediate support in the 0.8950 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.)

1/11/2010 – USD/JPY – After having hit a 4-month high at the top of a medium-term downtrend channel extending from the April 2009 high, price action on USD/JPY (a daily chart of which is shown) has respected that downtrend resistance by tentatively retreating.

This medium-term downtrend channel resides within a larger, long-term downtrend channel extending from the June 2007 high. Currently, a key bearish event to watch for would be a significant breakdown below the steep intra-channel uptrend support line (of the smaller channel) that represents the recent bullish price action from the bottom to the top of the smaller channel.

A strong breakdown below this steep uptrend line could mean a downside continuation of the medium-term downtrend. In the event that price rises to re-test and breakout above the medium-term downtrend channel, the pair could subsequently reach up to target further resistance around the 96.00 price region and the top border of the larger 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.)

1/08/2010 – USD/CHF – Price action on USD/CHF (a daily chart of which is shown) has, much like its EUR/USD counterpart, formed a solid flag pattern.

In the case of USD/CHF, this potentially bullish flag formation occurs after a tentative bottom was established just below parity. The top of this flag conforms approximately to a downtrend resistance line extending from the March 2009 high. If the flag fulfills itself as a continuation pattern with an upside breakout, which would coincide with an upside breakout above the noted downtrend resistance line, an immediate upside resistance target resides in the 1.0550 price region.

To the downside, if the downtrend resistance line and top border of the flag are ultimately respected, this currency pair could potentially target a re-test of parity and possibly go on to continue the long-term 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.)

1/07/2010 – USD/JPY – Price action on USD/JPY, a daily chart of which is shown, has hit a new 4-month high and, in the process, has reached the top of a medium-term downtrend channel extending from the April 2009 high.

This downtrend channel resides within a larger, long-term downtrend channel extending from the June 2007 high. Any further near-term bullishness that breaks out above the smaller channel could reach up to target further resistance around the 96.00 price region and the top border of the larger channel.

In the event of a significant breakdown below the intra-channel uptrend support line that represents the recent bullish price action from the bottom of the smaller channel to the top could presage a downside continuation of the medium-term 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.)

1/06/2010 – GOLD – Despite the deep bearish correction that occurred in spot gold (a daily chart of which is shown) in the month of December, price action has begun what could turn out to be a significant rebound as of the beginning of 2010. This occurs within the context of an overall, continuing uptrend.

The December bearish correction brought price down to a key 61.8% Fibonacci retracement level at around 1074 (the low-to-high retracement span being measured from the low on 10/2/2009 to the all-time high on 12/3/2009), before bouncing up off this support region. In the process of this bullish bounce, price also broke out above a steep downtrend resistance line that represents the drop from the all-time high. Currently, price action has approached short-term resistance around the 1141 price region.

Further bullishness on the rebound that breaks out significantly above the 1141 resistance region could target a re-test of the all-time high resistance around 1225. To the downside, within the context of a continuing uptrend in gold, key support remains in the 1070-75 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.)

1/05/2010 – EUR/USD – Price action on EUR/USD, a daily chart of which is shown, has consolidated in an inverted flag-like formation since late December.

This occurs after price dropped substantially starting in the beginning of December, breaking down below a key uptrend that had been in place since the March lows. In the process of dropping, EUR/USD also broke down below several key support levels, most recent of which was the approximate 1.4450 price region.

After breaking down below this level in mid-December, price has repeatedly attempted but failed to breakout above it once again, forming the noted flag consolidation in the process. If this flag turns out to be a true continuation pattern, a breakdown below the formation should confirm a continuation of a new downtrend. In this event, a major further support target to the downside resides around the 1.3800 price region. Conversely, if price manages to make a strong break and close above the noted 1.4450 resistance region, the pair could target further upside resistance in the 1.4800 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.)

1/04/2010 – USD/CAD – Price action on USD/CAD, a daily chart of which is shown, on the first trading day of the New Year has displayed a marked bearishness that has brought the currency pair back down to dip below strong recent support in the 1.0400 price region.

This tentative bearishness exists within the context of both a long-term general downtrend extending from the March 2009 high, as well as a flatter medium-term downtrend extending from at least August of 2009. The last bounce down off the medium-term downtrend resistance line occurred in mid-December.

If USD/CAD bearishness is to reign as 2010 commences, a breakdown and close below the noted 1.0400 support could target immediate further support around the 1.0200 region, which represents the long-term low in the pair that was hit in mid-October. To the upside, within the context of the noted medium-term downtrend, dynamic upside resistance continues to reside around the downtrend resistance line.

(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.)

12/23/2009 – Gold – Within the month of December, the dramatic bearish correction in spot gold (a daily chart of which is shown) has brought price action severely off the all-time high around 1225 hit early in the month. This month-long bearishness has thus far corrected the steep, and subsequently overbought, run-up in Gold that had occurred for several months prior to that all-time high being reached.

Despite this current bearish correction, gold is still very much within the bounds of overall uptrending mode. The drop that occurred this month has brought price down to a 61.8% Fibonacci retracement level of the run from the 985 low in early October to the 1225 all-time high.

This retracement level also represents a strong support area in the 1070 price region. Any breakdown below this region should meet further support at the long-term uptrend support trendline, if the uptrend is to be kept intact. And any breakdown of that trendline, which would jeopardize the uptrend, should meet immediate further downside support in the 1025 price region.

To the upside, if a pronounced bounce occurs at or around the aforementioned 61.8% level, confirmed by a strong breakout above the steep downtrend resistance line of the bearish correction, gold could very well be on its way to recovering the gains made prior to this month’s bearish correction.