Another week has passed and another objective has been met. Since overtaking 1.50, momentum behind the euro’s rally has certainly accelerated. This past Thursday, my target of 1.5325, at the lesser followed 138.2% Fibonacci extension, was met and surpassed. After EURUSD had overtaken this target with such force, I moved my bullish target out to the next major level – the 161.8% extension. This level is calculated from the same 10/09 to 11/23 rally that opened the pair’s four month-long wedge that fell with the break of 1.50. Set at 1.5555, this new target could easily be met with another thrust to the upside; but the presence of the 161.8% extension of the 11/23 to 12/20 downswing at 1.5425 and the psychological significance of 1.55 have raised caution. To secure profit and reduce risk, I have moved my bullish stop up to 1.52.
| The Fibonacci Personality: As the great master of Pisa once noted all of life is composed of Fibonacci. I use these golden ratios to understand the movements of the market and profit from their predictions. Let me know what you think of my analysis on the Fibonacci Forum. | • Euro Falls Just Short Of 1.55 With Fib Extensions Holding Resistance | |
| • Pound Forces Range, Considerable Breathing Room In Fib Congestion | ||
| • Yen Rally Hits Support With A 200% Extension Of The Last Pullback | ||
| • Parity May Be the Next Step For Swiss Franc Bulls | ||
| • Fib Congestion Keeps Range-Bound Canadian Dollar From Taking Direction | ||
| • Aussie Dollar Retraces, Fibs May Offer A Cheap Place To Buy | ||
| • Kiwi Retracement Doesn’t Follow Fib Guidelines |
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EUR/USD
Strategy: Bullish against 1.5200, Targeting 1.5555
Another week has passed and another objective has been met. Since overtaking 1.50, momentum behind the euro’s rally has certainly accelerated. This past Thursday, my target of 1.5325, at the lesser followed 138.2% Fibonacci extension, was met and surpassed. After EURUSD had overtaken this target with such force, I moved my bullish target out to the next major level – the 161.8% extension. This level is calculated from the same 10/09 to 11/23 rally that opened the pair’s four month-long wedge that fell with the break of 1.50. Set at 1.5555, this new target could easily be met with another thrust to the upside; but the presence of the 161.8% extension of the 11/23 to 12/20 downswing at 1.5425 and the psychological significance of 1.55 have raised caution. To secure profit and reduce risk, I have moved my bullish stop up to 1.52.
GBP/USD
Strategy: Bearish against 2.0035, Targeting 2.0465
The pound finally decided a direction for GBPUSD when the currency pushed through its broad range this past week and stumbled quickly into Fibonacci congestion. I had chosen last week to play the range rather than position for the breakout trade, but the my stop around the 38.2% retracement of the 11/09 to 1/22 downdraft was relatively close and kept me from greater losses (range trades aren’t only appealing for their greater probabilities, but also for their use in defining close stops and reasonable targets). With this upside push, the medium-term outlook has donned a bullish garb and so my next target will be set at the top of the pair’s larger-term fib congestion at 2.0465. This is against another modest stop of 1.9970 – the top of the January/February range.
USD/JPY
Strategy: Bearish against 104.20, Targeting 100.00
Another, momentous bear run has pulled USDJPY over 600 points lower in just two weeks. In the most recent leg of this downdraft, the yen has made more limited progress by rising only 200 points against its US counterpart. Further declines seems to be hampered by a Fib confluence around 100.25. Both a lesser 138.2% Fibonacci extension of the major 12/27 to 1/23 bear wave and a more technically significant 200% move from the trend channel between 1/23 to 2/14 are sharing this level. Since this support level happens to also fall in line with the major USDJPY swing low back in 1999, my bearish outlook has cooled considerably. I will maintain my 100 target, but it will be necessary to reduce risk due to the high probability of a considerable retracement.
USD/CHF
Strategy: Bearish against 1.0475, Targeting 1.0000
Much like the Japanese yen, the Swiss franc has enjoyed an incredible rally against the battered US dollar. However, unlike the yen, the franc has few reliable targets for its steady advance. USDCHF is already pressing new record lows, and there are few clear levels for market participants to pull major Fibonacci extensions from. My initial target of 1.0200 was last week, and selecting a new target is growing increasingly difficult. There are a number of fib extensions some distance below, but the market is likely to respond more readily to parity (1.0000), so that shall be my next bullish objective. On the other hand, the 700 point plus decline over the past two weeks raises the risk of a potential retracement. To compensate for this risk, I have moved my stop up to 1.0575 – though a breach of this level wouldn’t necessarily turn me into a long-term bull.
USD/CAD
Strategy: Flat, waiting for confirmed move below 0.9550 or the bull trend to retake 1.0200
The USDCAD’s stubbornness recalls to similar conditions years ago when this pair would completely ignore the trends that would overtake the other majors. Once again, the loonie-based pair is the only dollar-denominated major that has not joined the anti-dollar wholeheartedly. While we don’t need great trends to apply Fibonacci profitable, we do need a broad enough range to present reasonable risk/reward. This is not the case with USDCAD, which has been relegated by a volatile market to a choppy, rising wedge below 1.00. I will keep to the sidelines until the market presents us with more directionality or at least a broader range.
AUD/USD
Strategy: Bullish against 0.9005, Targeting 1.0000
The AUDUSD pullback that began last week has intensified. From the multi-decade high set on February 28th, spot has fallen back 350 points. This retracement has brought AUDUSD within stone’s throw of our first major Fibonacci support level: the 38.2% retracement of the massive 1000-point rally from 1/22 to 2/28. However, I am skeptical that this level alone would hold back a deeper pullback. To account for the steady downtrend developing on the shorter time frame charts, I have eased the stop on my bullish outlook back below the 50% fib of the aforementioned bull wave. Should Aussie buying reemerge above these Fib levels, I will be more confident in my ultimate objective for AUDUSD to reach parity.
NZD/USD
Strategy: Bullish against 0.7800, Targeting 0.8200
Considering the NZDUSD’s sharp, short-term reversal Tuesday morning, the initial stop on our bullish outlook proved prophetic. However, for this pair, the stops steadfastness is likely more chance than it was cold hard objectivism. Following in the footsteps of its high-yielding complement the Aussie dollar, the kiwi has been steeped into a deeper correction. Despite this pull back though, my bullish outlook is still intact and will remain that way until spot retraces half of its 800 point rally through January and February. Should NZDUSD regain its footing, my first target will be for a retest of the post-float record high at 0.82. Beyond that, I will need to turn to Fib extensions for reliable projections.
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