The Midday Forex Market Review

The dollar trends higher against all currency pairs.

USDCHF extends to 61.8% retracement level.

The USDCHF has not been immune from the dollar buying today. Like some of the other pairs, the pair has been trading in narrow trading ranges over the last few days.  Then today, the price moved above the 100 and 200 hour MA (blue and green lines in the chart above), the upper channel trendline and the 38.2% retracement level and the buying began.

Now the price is testing the 61.8 retracement at the 0.9429 level and finding some profit taking as London/Europe look to exit for the day.  Staying below the level gives traders a reason to sell. However, the sellers will have to break the buyers.  A move below the 0.9403/09 level is needed to turn some of the intraday bullishness back to the downside (see chart below).

EURUSD makes new December lows, but finds some profit takers. Bears remain in control

The EURUSD has moved to new month lows at the 1.2945 level.  The price range has now extended to 137 pips for the day which is on par with the 20 day average range for the pair.  So although the range seems extreme, the extreme is only in relation to the last 4 or 5 days when ranges were in the 40 pip range for the pair.  With liquidity low, anything can still happen today. What I do know is that the buyers will have to prove they can push the price up from here.

So where do the buyers have to push the market to negate some of the bearishness today?  The original low from the day at 1.2968 will be the first line that needs to be broken. Above that, the 38.2% of the trend move down at the 1.2991 will be the next target.  Failure to extend corrections above these levels, keep the bears in firm control (and the dip buyers worried).   Watch these levels for clues as the day progresses.

Trends are fast, directional and have ranges greater than normal.  The move down today is trend-like and should be analyzed/traded as such. The 1.2873 level is the 2011 low reached on January 10th 2011.

GBPUSD falls to new lows and next target support with little in the way of corrections along the way.

The beat goes on with the trend like move today in the GBPUSD. The selling is attributed to technical selling that is being turbo charged by illiquid market conditions. The pair is now at the next target support for the pair which comes against parellel channel trendline and lows from December 15th and December 19th.  That support comes in at the 1.5462-80 area (see chart above).

With the range for the day extending to 218 pips today, there should be some profit taking. However, trends are fast and directional and with the holiday liquidity at a low level, a move below the above mentioned support levels should not be ignored.   The low from December comes in at 1.54068 and this would be the next downside target  on a break of the support.

On the topside now, the 1.5524 level is the upside resistance now (high after the sharp fall).

The dollar is strongest against the GBP today.

The USD is strongest against the GBP on a percentage change basis. The dollar has risen by nearly 1%. The dollar is stronger by 0.63% vs the EURUSD.

The dam is broken. EURUSD falls on stops. Next stop 1.2982/87

The dam was broken and the price fell sharply. The EURUSD price is now below the low from December 21st at the 1.3016 level.  This will now be resistance along with 1.3023/26 for the pair on the topside.

On the downside, the  1.3982/87 level is the next target for the pair from a technical perspective. This level corresponds with the lows from December 15th and 19th. The lows for December come in at the 1.2945 level. The low for 2011?  1.2873.  Is it possible?  With illiquid markets anything is possible.

On the topside look for the 1.3023/26 area to hold corrective resistance. If the level can hold, there exists a chance for new lows. If the level is broken, there may be some short covering in the pair.

GBPUSD falls sharply. Approaches 61.8% of the move up from the December low

The GBPUSD is finding out what illiquid holiday trading can do. The price fell below the 100 hour MA (Blue line in the chart above) and the price started to fall sharply. The pairs has since moved below trendline support and the 200 hour MA at the 1.5619/23 area (now resistance).  The pair is now below the low for the week and is looking to approach the next key support at the 61.8% of the move up from the December low at the 1.5546 level.