08/14 - Chart of the week

The three major US equity indices have all stalled at key technical levels. The S&P 500 has paused at 1013.94, the 38.2% retracement of the 2007 & 2009 range. The DJIA has paused at the same retracement level (at 9424.70). The Nasdaq has completed a double bottom measured move near 2010 and has consolidated just below it over the past few sessions. While it may be premature to call a top, a correction is in store as these key resistance levels remain intact. The counter-rallies have been brief, mostly limited to 2 down days before finding a higher level of support. Thus, one way to gauge market strength will be to see whether Friday's retreat can extend through Tuesday, more than just a 2-day correction. If equities manage to rebound, however, there is a substantial probability that these equity indices will race to new highs.

08/13 - EUR/USD's symmetrical exhibition

The EUR/USD continues to respect 1.4227, the 50% retracement level of the 2008 highs & 2009 lows. Two weeks ago, the pair retraced 50% below this level, then 50% above the following week. Wednesday's rebound coincided with a 23.6% retracement below the 1.4227 pivot and Thursday's high rejected near 1.4312, 23.6% retracement above 1.4227. The symmetry exhibited suggests that despite last week's brief breakout, the EUR/USD should retest the region below 1.4227 relatively soon. Meanwhile, the DXY is probing the June pivot low of 78.31 since putting in a 3-day double top. A higher base is sought to take out the resistant 35-day exponential moving average.

08/11 - The big picture

The US Dollar Index is consolidating near the 78.6% retracement of the latest downleg, a key last stop ahead a probable full retracement. The DXY is probing the 35-day exponential moving average after a succesful defense of 78.20, a 61.8% retracement. Above the 50-day MA is the 50% retracement at 80.40, while below 78.79 (61.8% of 77.42-79.64) will delay the current recovery for the 10-day MA at 78.51.

The EUR/USD is consolidating above the 50-day MA since rejecting at the 50% pivot retracement at 1.4217. This bearish rejection and the emergence of a possible weekly RSI double top hint of further weakness despite oversold 4-hourly studies and daily RSI. If the single currency maintains 1.4073 (50-day MA) , however, then the medium-term bullish structure remains intact.

08/11 - Position adjusted

08/10 - GBP/USD tests the 50-day MA

The US Dollar Index has continued to rally after marking a short-term double bottom last week. The disconnect with the tight correlation between risk appetite and dollar weakness has put an emphasis on the importance of interest rate differentials. The BOE's announcement to increase quantitative easing followed by a stronger-than-expected non-farm payrolls report has enabled the the interest rate differential between 10-year (UK ) Gilts and 10-year (US) Treasuries to shrink from a 32 basis point advantage to a +11 differential. The GBP/USD's weakness highlights bearish MACD divergence and has triggered the latest probe of the key 50-day moving average. A sustained loss of 1.6430 (50-day MA) exposes the 1.6000 region and will signal a medium-term shift in trend. Meanwhile, the DXY and EUR/USD are approaching their 50-day MA's and should be tested if the Cable continues to retreat.

08/07 - Position/orders adjusted

08/07 - USD/CAD position adjusted