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Life in a hurricane

Blog & Emails

Like a hurricane, the leading edge has hit, but it’s got a lot ground to cover still. This morning on Bloomberg.com there was talk of consolidation in the stock market and cautious buys. This with one catch, they see 1-3 years of mixed recession and recovery. The interesting stat was that the last time the Govt. created a bail out like this, it took 2-3 years for the economy to turn the corner. We’ll see how the dollar stands up to back edge of the hurricane, because it is sure to come.

EUR/USD: Above 1.4700 and 38.2 Fibo
GBP/USD: Approaching key Resistance
USD/JPY: Little action over night
USD/CHF: Below key support, 50 % Fibo up next

EUR/USD

Overnight the pair slowly and steadily climbed to 1.4686 high so far this morning. Given that R2 rests above at 1.4721 and that the 38.2 % fibo line comes in at 1.4700, longs can plan on 1.4700 hitting today. If it doesn’t hit, it will come close. Taking advantage of dollar weakness, the Euro wants to take price at least to 1.4900, the 50% Fibo line. From there it will again become anyone’s game. With no major news coming out of the US until late in the week, we could see flows simply take the price to 1.4900. Support comes in above 1.4500 and resistance should be seen at 1.4800 and 1.4900.

forex chart

GBP/USD
Price action overnight pierced the 1.8472 line which was the 38.2 % Fibo line. As this line breaks down 1.8795 comes into focus next. Between current prices and the 1.8795 line was where the move took a breather before making the big push to the 1.7445 line. This very well could be the

Consolidation point before further dollar gains happen. As long as 1.9100 does not give then strength bias is on the dollars side. Currently prices are just below the 1.8504 low from 08/22 before the breakdown. If/when this area gives the shot to 1.8795 could happen in a single day. Tonight the significant resistance comes in the 1.8550/55 area that was the flop point for support to resistance from 08/15 to 08/22 TO the bottom 1.8390 should support before any move lower happens.

forex chart

USD/JPY
The pair backed away from the down trend line overnight and is currently second guessing that move. Unable to break the S1 line that sits around 105.90, price has moved up from there. It makes sense that the

Buck would stay stronger against the Yen then the other majors considering the rate differential in this pair is the only USD positive. T the top side 107.50 and 108.00 are resistance on any attempots higher. To the bottom 106.00 is shaping up to form the base. Look for the base to seriously test before the top side is.

forex chart

USD/CHF
The move overnight to 1.0837 brings price to the bS2 line where it currently sits waiting for further action to take it lower. Price has broken the 1.0842 low from 08/21 to make it to a low of 1.0820. If the day closes below here as it looks to be doing, then 1.0715 comes into focus next. Hourly’s are a little oversold and may support for the afternoon. Keep in mind that lately the moves have been initiating in the Asian session and continuing or reversing in the European session. 1.0745/50 is shaping up as support for the move into 1.0715. Considering the fact that 1.0715 comes in the middle of the 08/08 bar, there isn’t much there for price to hold onto. Look for 1.0640 to print if 1.0745/50 breaks.

forex chart