Dollar Bounces - Can Greenback Extend Gains?

• Euro Consolidates Post 1.3400
• Japanese Yen To Triangle Resistance
• British Pound 1.9570 Support
• Swiss Franc Ranging
• Canadian Dollar Remains Strong
• Australian Dollar Peaking?
• New Zealand Dollar Up 8 Consecutive Days


EURUSD – “Risk is quickly shifting to the downside. Daily RSI is divergent at the new high and yesterday’s candle was close to being a bearish engulfing pattern.” We are showing a very short term chart this morning since the EURUSD may be at a major turning point. Notice that there are 5 waves down from 1.3412 to 1.3302. This suggests that once this bounce is finished, another 5 wave decline will occur. Resistance is at the 61.8% of this short term decline at 1.3370. More bearish prospects come to the forefront on a break below the 2/27 high at 1.3262.
Key Levels & Technical Indicators


USDJPY – As long as 118.51 holds as resistance, the triangle structure remains intact and the next move of consequence should be down towards triangle support near 116.50. The turn lower from the top of the triangle last night increases confidence that the pair is headed towards 116.50. 117.84 is short term resistance.
Key Levels & Technical Indicators


GBPUSD – Little is changed since yesterday. We have labeled the rally from 1.9213 as a 3rd wave rally, so we are expecting some pullback with support at 1.9556 (prior 4th wave). 1.9693 is most likely the top of wave B within an A-B-C correction that began at 1.9729. We are looking for a C wave to complete the 4th wave correction and end near 1.9556. 1.9693 is short term resistance.
Key Levels & Technical Indicators


USDCHF – The USDCHF rally from 1.1877 to 1.2571 traced out 5 waves, meaning that the larger trend is up. Once 5 waves are completed, a correction should unfold in 3 waves. The correction that ensued was a complex one, known as a double zigzag (two a-b-c corrections connected with an X wave?labeled W-X-Y). Our confidence that a bottom is in place is improved due to the fact that the pair turned up from the 78.6% Fibonacci level of the 1.1877-1.2571 rally. The rally beginning now should eventually take out the January high at 1.2571.
Key Levels & Technical Indicators


USDCAD – This big decline is likely the C wave of an A-B-C decline from 1.1879. 1.1512 is where the C wave decline would equal the A wave decline. Support is reinforced by the confluence of channel support / 11/21/2006 high at 1.1470. RSI (daily) is nearing oversold territory and CCI (daily) is below -100. The pair is likely to chop lower to test the mentioned support near 1.1470/1.1512 before a major rally attempt.
Key Levels & Technical Indicators


AUDUSD – Focus remains on .8130 but the Aussie is nearing the latter stages of a long term rally. Daily RSI is oversold for the first time since November 2006. Similar to Cable, we are looking for a corrective wave 4 followed by a thrust higher in wave 5 in order to complete the 5 wave bullish sequence that began at .7680. Support is estimated at .7970. For more, see http://www.dailyfx.com/story/charting_center/weekly_chart_analysis/AUDUSD___This_Weeks_Technical_1174062470292.html
Key Levels & Technical Indicators


NZDUSD – Kiwi continues to head north, having rallied for 8 consecutive days now (if today’s gains hold up). We went back and did some statistical work and found that 8 consecutive days of gains in NZDUSD has happened on only 2 occasions in the last 10 years. From 4/25/2003 to 5/6/2003 and from 1/30/2004 to 2/11/2004. In the former instance, the next day did see a decline but the uptrend remained intact. In the latter instance, a major reversal took place. The rally is certainly getting extended as evidenced by the risk reversal rate on 1 month options (call price – put price) is the highest that is has ever been. The previous high for the RR rate occurred in early January of this year when Kiwi topped out at .7097. A break above .7127 exposes the next level of chart resistance at .7202 (12/5/2005 high). Coming under .6991 indicates bearish potential (possibly a major reversal).
Key Levels & Technical Indicators

Intra-Day Pivot Points


Glossary of Terms
CCI(20) – 20 day Commodity Channel Index
> 0 – bullish
0 > – bearish
> 100 – extremely bullish
-100 > - extremely bearish

RSI(14) – 14 day Relative Strength Index
> 50 – bullish
50 > – bearish
> 70 – overbought
30 > - oversold

MACD ? - MACD slope (MACD – MACD[1])
> 0 – bullish
0 > - bearish

Mom(21) – 21 day Momentum
> 0 – bullish
0 > - bearish

ATR(14) – 14 day Average True Range (volatility)
Medium – 75th percentile* > ATR(14) > 25th percentile*
High - > 75th percentile*
Low – 25th percentile* >

*measured against past 3 months