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Post Traumatic Stress Disorder and the Currency Market

Blog & Emails

The currency market was in shock the last few days after the

FOMC and Lehman news hit over the last two days. Spreads are finally normalizing and traders are starting get back into the game.

EUR/USD: Breaks Higher
GBP/USD: Kills the R2 line
USD/JPY: Holding tight
USD/CHF: Approaching previous support

EUR/USD
The pair seemed ready to break lower this morning, but did not. Instead it raced for the R1 line at 1.4269 to find

Resistance.

Overnight the pair meandered on either side of the PP and tried making the best of attempts to hit S1 but failed. When the top side finally came into focus the hourly MACD had to rollover abruptly. Given that state of the hourly GaPs wide open position look for 1.4323 to hold on the top side and today there should be no further test to the bottom. The move here this morning was really just a move from the bottom of the

Range to the top of the range (top 1.4323, bottom 1.4080). Tonight a move bottom should be contained by the lower side of the range but a top side break may work out to try and test the 1.4484 high from Sunday night. The late afternoon break higher may have wasted a good portion of the GaP signal for a prolonged run to the top side.

GBP/USD
The pair has rallied through the Sunday night high and R2. Sterling looks to be on a roll this afternoon. I included the chart below before the move took place and it’s clear that the top side won out. Currently price is tackling the R2 line above 1.8143. with a close above the 1.8129 the 50%

Retracement of the smaller second leg of the push down from August is complete and 1.8285 calls from above. With a convincing break of 1.8285 the first Fibo resistance line comes in at 1.8472 drawn on the entire move from 2.0160 to 1.7445. Conveniently enough this area propped the leg down beginning August 15th and broke on August 25th.

USD/JPY
Dollar Yen is finding support from 104.50 after spending overnight above the PP and only breaking below there in early morning trading. A nice hourly down tend resistance line formed along the top of price overnight and kept the pair under pressure. As long as the hourly resistance line holds then the downside looks most likely to be seen with yesterday’s low of 103.53 being shot at. Tonight the S1 comes in just above that number. On the top side look for 106.50 to keep the pair capped.

USD/CHF
Significant pressure from the top side pushed the pair lower in late afternoon trading which broke yesterday’s low of 1.1047Stalling here before 1.0972 is hit. Keep a close eye on oversold hourly’s. The plumed low of 1.1008 is right above where price range traded from 08/04/08 to 09/02/08 before breaking higher. That range was 1.1019-1.0846 approximately.