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.)

5/12/2010 – GBP/USD – Price action on GBP/USD, a daily chart of which is shown, has been unable to make a daily close below key support in the 1.4800 price region for more than a year. This is despite several attempts to move below that level for the past several trading days.

Currently, price is firmly entrenched within a strong overall downtrend. 1.5000 support was swiftly broken late last week, and the continuing bearishness in this pair is now struggling with the noted 1.4800 level.

This currency pair is now wavering in consolidation, but a strong breakdown and daily close below the 1.4800 level would be a significant bearish indication, and could then potentially prompt price to target further downside support in the 1.4500 region. Upside resistance within the context of the current downtrend tentatively resides in the key 1.5000 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.)

5/11/2010 – EUR/USD – Price action on EUR/USD, a daily chart of which is shown, has begun once again to resume its bearish stance after having made a sharp bullish correction up to approach strong resistance in the 1.3100 price region in the beginning of this week.

The current bearish resumption occurs after last week’s dramatic plummet down to approach key support in the 1.2500 price region that established a new 14-month low for the pair. Although Monday’s bullish correction up to 1.3100 was swift and substantial, it quickly retreated and has turned out thus far to be a failed recovery. The technical bias for this currency pair currently remains bearish in line with the accelerated overall downtrend.

Clearly, the noted 1.2500 key level remains the downside level to watch, as a breakdown below it would confirm a downtrend continuation. If this breakdown occurs, price could potentially target further downside support in the 1.2300 price region. To the upside, within the context of the strong current downtrend, key resistance resides in the 1.2900 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.)

5/10/2010 – USD/JPY – Price action on USD/JPY, a daily chart of which is shown, dropped around 600 pips down to key 88.00 support on Thursday (5/06/2010) of last week, but quickly recovered a portion of its losses the very next day.

Beginning the new trading week after last week’s short-lived plummet, price action continues to recover much of last week’s one-day losses. Although last week was characterized by a wild swing to the downside, the technicals could begin to re-emerge this week. To the upside, the key price level to watch continues to be in the 95.00 region.

A strong break to the upside above this level should mean a resumption of the bullishness that prevailed before last week’s dramatic fall. In the event that 95.00 is broken significantly to the upside, price could then potentially target further key upside resistance in the 98.00 price region, thereby potentially continuing the previously prevailing uptrend.

(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.)

5/07/2010 – EUR/USD – After the dramatic drop this entire week (and especially on Thursday) that has established a new 14-month low around its expected 1.2500 support target, price action on EUR/USD (a daily chart of which is shown) has made an anticipated bullish correction.

Despite this counter-trend correction, the strong bearishness that has characterized this currency pair for the last several days is likely not yet over. Price action on Thursday (5/06/2010) broke down swiftly below a dynamic support trendline extending from the October 2008 low, and closely approached its expected target around the 1.2500 price region, establishing a fresh 14-month low.

Price action on Friday (5/07/2010) made a bullish correction back up to re-test the broken dynamic support trendline, but quickly retreated back down. Within the context of the strong and continuing downtrend in EUR/USD, any subsequent breakdown below 1.2500 could target further key downside support around the 1.2300 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.)

5/06/2010 – GBP/USD – Price action on GBP/USD, a daily chart of which is shown, has once again descended to approach key support in the important 1.5000 price region.

This occurs within the context of a strong overall downtrend. The entire current week has thus far been characterized by marked bearishness after having descended from the 1.5350 region resistance. The technical bias on this currency pair continues to be bearish in line with the current prevailing downtrend.

A key event to watch for would be a strong breakdown below the noted 1.5000 price region, in which case price could potentially target significant downside support in the 1.4800 price region, which represents the level of the previous long-term double-bottom low.

(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.)

5/05/2010 – AUD/USD – Price action on AUD/USD, a daily chart of which is shown, has broken the previous intra-range uptrend and dropped to approach key support in the important 0.9000 price region.

This occurs within an overall sideways trading range extending from late 2009, and after price hit a high approaching the significant 0.9400 resistance level in mid-April. In the event of a continuation of the current bearishness that goes on to break down below 0.9000, a key support target further to the downside resides in the 0.8800 price region.

In the event of a further breakdown below that level, another important support target to the downside resides around the 0.8600 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.)

5/04/2010 – EUR/USD – Price action on EUR/USD, a daily chart of which is shown, has tentatively broken down below key support in the 1.3100 price region, establishing a new 12-month low in the process.

This bearish break has also confirmed a continuation of the strong downtrend that has been in place since December 2009. With continued bearishness off the current breakdown, price could target further downside support in the 1.2900 price region. On a longer-term basis within the context of the continuing downtrend in this currency pair, a major downside support target resides in the 1.2500 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.)

5/03/2010 – EUR/GBP – Price action on EUR/GBP, a daily chart of which is shown, has consolidated within a slightly bullish consolidation that has taken the form of an inverted flag pattern.

This occurs within the context of a clear downtrend extending from a mid-March high, and after price broke down below a confluence of two different uptrend support lines. The current flag consolidation also occurs after bearish price action dropped down to key support around the important 0.8600 price region.

If the current inverted flag fulfills its common role as a continuation pattern, a breakdown below the pattern (which would be around the noted 0.8600 support level) would confirm a downtrend continuation and potentially begin targeting further downside support around 0.8400.

(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.)

4/30/2010 – USD/CHF – Price action on USD/CHF, a daily chart of which is shown, has reached up to the key 1.0900 resistance region before retreating.

This occurs within the context of a strong continuing uptrend (extending from the November 2009 low below parity), and after price made a substantial bullish run in the past two weeks off key support in the important 1.0500 price region. Despite the current retreat from 1.0900 resistance, overall bullishness in the pair within the context of the strong uptrend is likely not yet over.

Any subsequent bullish re-break and daily close above 1.0900 should target immediate further resistance in the key 1.1000 price region. Further up, in the event of further bullishness within the current uptrend, an important upside resistance target resides in the 1.1250 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.)

4/29/2010 – USD/JPY – Price action on USD/JPY, a daily chart of which is shown, has continued to follow a rough uptrend support line extending from the early March low just above 88.00.

More recently, after breaking out above a long-term parallel downtrend channel in late March, price shot up to reach a high just below 95.00 in early April. Finally, early last week price launched off the key 92.00 support region, and currently appears to be targeting the 95.00 area once again. The technical outlook on USD/JPY continues to appear bullish.

A breakout above 95.00 should be a strong confirmation of an uptrend continuation. In the event of a substantial breakout above 95.00, further bullish momentum could begin to target further key resistance around the 98.00 price region.