Wednesday, August 4, 2010

USD index and some charts

Although I am really on holiday it is ADP and NFP employment week so I have an eye on the markets.

The dollar index is bearing down on the 80.30-40 level which was major support in 12/04, 5/95 and 2/ 91 (not shown).  These support levels can be funny, just because it passed through it like butter last time, doesn't mean it won't suddenly be kryptonite this time, especially after such a long bearish run for the US dollar and sentiment so poor.  So it is definitely a level to watch for a possible dollar bounce.  The sentiment for the dollar is very poor but NFP could surprise to the upside.

Some major dollar crosses have a bit further to go before they reach potential turning points (I am looking for 1.35 for EURUSD) but some like sterling are already at big levels vs the dollar.
It is still early August but end of August is often a time when new trends emerge. 

Sterling has the bank rate and BoE MPC statement Thursday so I thought I would take a look at some sterling crosses.

Cable has hit the big round number 1.60 level which is also the 61.8fib retracement from the August 09 high to the May 10 low.  Having rallied with such momentum (and its best run in a lot of years) this could be a level for a correction but it could involve some chopping around and retests before it turns.  One to watch.  
A break above 1.60 says 1.6450 next stop.

GBPCHF Weekly chart shows it is back at the 50fib of the rally from the Dec08 lows to the Summer 09 highs and also at trend-line resistance from the July 07 high.  
The daily chart shows it has rallied to the 61.8fib retracement and also a big pivot zone.  A rejection here could should mean back to the lows at 1.58 or a breakout means back to the highs at 1.71.  
Nice size moves either way and I favour the downside and a possible measured move objective of 1.53 if the support at 1.58 does not hold.

If cable has stalled and EURUSD has further to run up it can only mean one thing for EURGBP.  EURGBP is hovering at the 50fib retracement of the rally from the lows and Mondays and bullish tail on Monday followed by an inside bar today suggest saving some energy for a move.

GBPJPY daily chart
Has been range bound for some time below the 50fib and 136.40 level, broke out Monday and has fallen back.  If cable stalls and USDJPY continues to drop this is going down too.

This is a tricky one, consolidating.  Monthly doji and a weekly doji but in a rising channel and the 50fib retracement is holding so it could be that the AUD is more unloved than the pound.  Waiting for a breakout and more information.

Weekly chart.  Broke out above resistance at 1.6230 and then banged its head on the 61.8fib retracement of the Jan high to May low.  Needs to  either break above the 1.64 resistance or go back and test the 1.6230 support to convince me it is going higher here but there is definitely plenty of room to the upside.  One to watch.