Currency Market Summary and Recap for Week Ending January 16th - Dollar, Franc, Euro, Pound, Yen

The March U.S. Dollar closed higher on Friday as it extends this winter's rally. The mid range close sets the stage for a steady to higher opening when Tuesday's night session begins trading. Stochastics and the RSI are overbought, diverging and are turning neutral to bearish signaling that a short term top might be in or is near. Closes below the 20 day moving average crossing at 91.29 would confirm that a short term top has been posted. If March extends the rally off October's low, weekly resistance crossing at 94.32 is the next upside target. First resistance is today's high crossing at 93.56. Second resistance is weekly resistance crossing at 94.32. First support is the 10 day moving average crossing at 92.28. Second support is the 20 day moving average crossing at 91.29.

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The March Euro closed lower on Friday as it extends this winter's decline. The mid range close sets the stage for a steady opening when Tuesday's night session begins trading. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If March extends this winter's decline, monthly support crossing at 112.75 is the next downside target. Closes above the 20 day moving average crossing at 119.87 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 117.96. Second resistance is the 20 day moving average crossing at 119.75. First support is today's low crossing at 114.67. Second support is weekly support crossing at 112.75.

The March British Pound closed lower on Friday. The mid range close sets the stage for a steady to lower opening when Tuesday's night session begins trading. Stochastics and the RSI are neutral signaling that sideways trading is possible near term. If March extends the decline off July's high, monthly support crossing at 1.4806 is the next downside target. Closes above the 20 day moving average crossing at 1.5351 are needed to confirm that a low has been posted. First resistance is Thursday's high crossing at 1.5261. Second resistance is the 20 day moving average crossing at 1.5351. First support is last Thursday's low crossing at 1.5027. Second support is monthly support crossing at 1.4806.

The March Swiss Franc closed higher on Friday as it extended Thursday's huge rally. The high range close sets the stage for a steady to higher opening when Tuesday's night session begins trading. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If March extends this week's rally, monthly resistance crossing at 1.2503 is the next upside target. Closes below the 20 day moving average crossing at 1.0172 would confirm that a short term top has been posted. First resistance is Thursday's high crossing at 1.1862. Second resistance is monthly resistance crossing at 1.2503. First support is Wednesday's low crossing at 0.9777. Second support is monthly support crossing at 0.9421.

The March Canadian Dollar closed slightly higher on Friday. The high range close sets the stage for a steady to higher opening when Tuesday's night session begins trading. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If March extends this winter's decline, monthly support crossing at 80.30 is the next downside target. Closes above the 20 day moving average crossing at 84.90 are needed to confirm that a low has been posted. First resistance is the 20 day moving average crossing at 84.90. Second resistance is the reaction high crossing at 86.33. First support is today's low crossing at 82.90. Second support is monthly support crossing at 80.30.

The March Japanese Yen closed lower on Friday marking a downside reversal. The low range close sets the stage for a steady to lower opening when Tuesday's night session begins trading. Stochastics and the RSI are overbought and are turning neutral to bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at .8398 would confirm that a short term top has been posted. If March extends this week's rally, December's high crossing at .8663 is the next upside target. First resistance is December's high crossing at .8663. Second resistance is the 25% retracement level of the 2013-2014 decline crossing at .8773. First support the reaction low crossing at .8282. Second support is December's low crossing at .8219.

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Currency Market Summary for Monday Morning June 2nd

The June U.S. Dollar was higher overnight. Stochastics and the RSI are overbought and are turning neutral to bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 80.06 are needed to confirm that a short term top has been posted. If June extends the rally off May's low, April's high crossing at 80.77 is the next upside target. First resistance is the overnight high crossing at 80.63. Second resistance is April's high crossing at 80.77. First support is the 20 day moving average crossing at 80.06. Second support is the reaction low crossing at 79.93.

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The June Euro was lower overnight. Stochastics and the RSI are oversold and are turning neutral to bullish hinting that a short term low might be in or is near. Closes above the 20 day moving average crossing at 137.16 are needed to confirm that a low has been posted. If June extends the decline off May's high, the 38% retracement level of the 2013-2014 rally crossing at 135.45 is the next downside target. First resistance is the 10 day moving average crossing at 136.43. Second resistance is the 20 day moving average crossing at 137.16. First support is last Wednesday's low crossing at 136.08. Second support is the 38% retracement level of the 2013-2014 rally crossing at 135.45.

The June British Pound was lower overnight. Stochastics and the RSI are turning neutral to bullish hinting that a short term low might be in or is near. Closes above the 20 day moving average crossing at 1.6830 would confirm that a short term low has been posted. If June extends the decline off May's high, the reaction low crossing at 1.6640 is the next downside target. First resistance is the 20 day moving average crossing at 1.6830. Second resistance is the reaction high crossing at 1.6919. First support is the reaction low crossing at 1.6640. Second support is the reaction low crossing at 1.6545.

The June Swiss Franc was lower overnight and is poised to extend the decline off May's high. Stochastics and the RSI are oversold and are turning neutral to bullish hinting that a short term low might be in or is near. Closes above the 20 day moving average crossing at 1.1240 are needed to confirm that a low has been posted. If June extends the aforementioned decline, the 75% retracement level of the January-March rally crossing at 1.1160 is the next downside target. First resistance is the 10 day moving average crossing at 1.1170. Second resistance is the 20 day moving average crossing at 1.1240. First support is last Wednesday's low crossing at 1.1124. Second support is the 75% retracement level of the January-March rally crossing at 1.1086.

The June Canadian Dollar was slightly lower overnight. Stochastics and the RSI are neutral signaling that sideways to higher prices are possible near term. If June renews the rally off March's low, the 38% retracement level of the 2013-2014 decline crossing at 92.96 is the next upside target. Closes below the 20 day moving average crossing at 91.85 are needed to confirm that a short term top has been posted. First resistance is the reaction high crossing at 92.40. Second resistance is the 38% retracement level of the 2013-2014 decline crossing at 92.96. First support is the 20 day moving average crossing at 91.85. Second support is the reaction low crossing at 90.35.

The June Japanese Yen was lower overnight. Stochastics and the RSI are turning neutral to bearish signaling that sideways to lower prices are possible near term. From a broad perspective, June needs to close above .9930 or below .9598 to confirm a breakout of a four month old trading range. First resistance is May's high crossing at .9920. Second resistance is February's high crossing at .9930. First support is the reaction low crossing at .9771. Second support is May's low crossing at .9687.

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FMC Extreme Currency Market Summary for Thursday July 18th

The September Dollar closed higher due to short covering on Thursday as it consolidates some of Tuesday's decline. The mid range close sets the stage for a steady opening when Friday's night session begins trading. Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible near term. If September extends this month's decline, the 62% retracement level of the June-July rally crossing at 82.27 is the next downside target. Closes above the 10 day moving average crossing at 83.57 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 83.57. Second resistance is July's high crossing at 84.96. First support is Wednesday's low crossing at 82.47. Second support is the 62% retracement level of the June-July rally crossing at 82.27.

The September Euro closed slightly lower on Thursday as it consolidates some of Tuesday's rally. The high range close sets the stage for a steady to higher opening when Friday's night session begins trading. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If September extends the rally off July's low, June's high crossing at 134.24 is the next upside target. Closes below the 10 day moving average crossing at 130.00 would confirm that a short term top has been posted. First resistance is last Thursday's high crossing at 132.12. Second resistance is June's high crossing at 134.24. First support is the 10 day moving average crossing at 130.00. Second support is July's low crossing at 127.55.

The September British Pound closed higher on Thursday as it extended yesterday's breakout above the 20-day moving average confirming that a short term low has been posted. The high-range close sets the stage for a steady to higher opening when Friday's night session begins trading. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If September extends the rally off July's low, the reaction high crossing at 1.5298 is the next upside target. Closes below the 10 day moving average crossing at 1.5054 would confirm that a short term top has been posted. First resistance is the reaction high crossing at 1.5298. Second resistance is the reaction high crossing at 1.5523. First support is the 10-day moving average crossing at 1.5054. Second support is July's low crossing at 1.4806.

The September Swiss Franc closed lower due to profit taking on Thursday but remain above the 20 day moving average crossing at .10568. The low range close sets the stage for a steady to lower opening when Friday's night session begins trading. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If September extends the rally off last week's low, the reaction high crossing at .10829 is the next upside target. Closes below the 10 day moving average crossing at .10497 would temper the near term friendly outlook. First resistance is Wednesday's high crossing at .10693. Second resistance is the reaction high crossing at .10829. First support is last Thursday's gap crossing at .10446. Second support is the 87% retracement level of the May-June rally crossing at .10284.

The September Canadian Dollar closed higher on Thursday as it extends this week's trading range above the 20 day moving average. The high range close sets the stage for a steady to higher opening when Friday's night session begins trading. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term. If September renews the rally off last week's low, June's high crossing at 98.46 is the next upside target. Closes below the 20-day moving average crossing at 95.33 would confirm that a short term top has been posted. First resistance is last Thursday's high crossing at 96.69. Second resistance is June's high crossing at 98.46. First support is the 20 day moving average crossing at 95.33. Second support is July's low crossing at 94.09.

The September Japanese Yen closed lower on Thursday and below the reaction low crossing at .9949. The low range close sets the stage for a steady to lower opening when Friday's night session begins trading. Stochastics and the RSI are neutral signaling that sideways to lower prices are possible near term. If September renews the decline off June's high, July's low crossing at .9852 is the next downside target. Closes above the reaction high crossing at .10184 are needed to confirm that a low has been posted. First resistance is the reaction high crossing at .10184. Second resistance is the reaction high crossing at .10318. First support is July's low crossing at .9852. Second support is the reaction low crossing at .9757.

J.W. Jones: Is The S&P 500 on the Verge of a Big Rally

Only 5 short months ago the S&P 500 was trading at the 2011 highs around the 1,370 price level on the S&P 500 Index. Since then, the price action has devastated investors and traders alike. As of the close on Monday, the S&P 500 had worked over 270 handles lower in 5 months. The price action since September 27^th has been a bloodbath.

It is true that the S&P 500 could be carving out a double bottom on the daily chart, but I am of the opinion that there may be more work to do to the downside. We are oversold on the daily and weekly price charts, but I have yet to see the kind of panic level selling that typically precedes a price reversal. The chart below illustrates the number of stocks that are currently trading above the key 50 period moving average:



While most market participants are concerned about a trap door that causes prices to cascade lower, I am concerned that at some point news will come out that could rip the bears’ faces off. The majority of retail investors are running for cover. The sentiment levels are decidedly bearish and the last thing most traders are looking for is a rally. The contrarian trader in me cannot deny that a rally would do a lot of damage in the near future, but Mr. Market needs to suck in a few more bears in order to do the most harm.

One sound bite out of Europe could alter the price action almost instantly in favor of the bulls. The ECB could suddenly cut interest rates or announce that Eurobonds are going to be made available. Either two headlines or a combination of both headlines would most likely drive prices significantly higher.

After the nasty downside probe today, there are layers of buy stops above current price levels. If price worked high enough, the stops would be triggered and an all out rally could play out. Anything coming out of the Eurozone that appears to be either stimulative or that appears to push an ultimatum out on the time spectrum will be viewed as positive.

Often news and price action play out together at key support/resistance levels and it would make sense that some form of announcement will be made when the S&P 500 price is sitting right at a long term support level. As can be seen from the weekly chart of the S&P 500 Index ($SPX) below, the 1,008 – 1,050 price level is of critical importance.



The primary support levels I am watching on the S&P 500 if it continues lower are the 1,080 price level which should act as short term support. If that level breaks the 1,050 area will become a major support level that bulls will likely defend fervently. Additional long term support will come in around 1,008. I would be shocked to see the S&P 500 push through both the 1,050 and the 1,008 price level on the first attempt, but stranger things have happened.

If price works down to the 1,008 – 1,050 support zone it would not be shocking to see a strong reversal higher. With the recent carnage we have seen in the S&P 500, I find it hard to believe that we could see another 10 – 15% more downside before a reversal plays out. The 1,008 – 1,050 price zone seems ripe for a test, but one other scenario would be a test of the 1,080 support zone that fails intraday and by the close is regained. The chart below illustrates the two most probable scenarios:



Financial markets do not offer a sure thing, however it is without question that bulls will aggressively defend the 1,008 – 1,050 price level on the S&P 500. If that level fails, the price action is going to get far worse and an all out crash could be underway. For now, I am of the opinion we are within 7% – 8% of an intermediate term bottom which could produce a strong multi month rally into the holiday season.

As always anything could happen, but traders need to keep their eye on both sides of the price action. A rally would do a lot of damage to the bears as well as the under invested retail traders and investors. Ultimately the price action is in the hands of Mr. Market, but it is a well known fact that Mr. Market likes to trap traders and inflict pain on as many market participants as possible. A forthcoming rally  would offer yet another opportunity for a lot of traders to eat another slice of humble pie.

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New Video: Dollar Index Going Higher?

It has been a while since we looked at the dollar index, so today we decided to dissect this market and look at it step by step.

What is happening in this market is very interesting and we think you will see in this short video just what we have in mind.

Just click here to watch "Dollar Index Going Higher" and as always, our videos are free to watch and there are no registration requirements. Do you agree with our analysis of the dollar index? Please feel free to leave a comment and let us know what you think.


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