Technical Overview

• Euro Sees 2004 Low
• Japanese Yen retaliates In Force
• British Pound Struggles To Retain 1.7500

Traders Corner
Why do we trade? Money, financial freedom, recognition, success, maybe. Those all good reasons to trade, but they ultimately lead to vanity and greed and that leads to devastation. Greed is the worst motivation for trading; market will always punish greed and will always reward moderation. Never try to make all of the money in one trade; you can't place everything on the outcome of one trade, if the trader does that, than I see no future for that trader, because he or she is not trading, but gambling. There is a fine line between traders and gamblers, because when there is money there are always those taking blind chances. If you want to succeed as a trader, do not think like a gambler, do not take blind chances and do not rely on luck because luck comes and goes just like a gambler, it's the trader who remains. Please feel free to email me at sshenker@fxcm.com with your comments. 

EUR/USD - Euro bulls continued to retreat after the dollar longs launched a decisive counterattack that pushed the pair toward the new 2005 low at 1.1786. As the price action remains on the side of the greenback bulls, a further move to the downside seeing the dollar longs take on the 1.1760, a 2004 low. A break below the 1.1700 level will most likely see the market confirm the dollar dominated trend with greenback longs aiming toward 1.1546, a level established by the October 17, 2003 daily low and a gateway toward the psychologically important 1.1500 handle. Indicators are favoring dollar longs with both momentum indicator and negative MACD below the zero line, while neutral oscillators give either side enough room to maneuver.
 
USD/JPY - Japanese Yen longs managed to launch a counter attack after the foray above the 118.00 handle, with the pair establishing a new multi-year high at 118.41. A retrace from these levels will most likely see the yen longs make their way toward the 117.00 and with break to the downside aiming for the dollar bids around 115.74, a level marked by the 20-day SMA. A further move to the downside will most likely see the momentum of the yen bulls stall below the psychologically important 115.00 figure at 114.40, a level established by the October 5 daily high. Indicators remain supportive of the dollar longs with both momentum indicator and MACD treading above the zero line, with ADX above 25 at 34.55 signaling an existence of a trend not a direction of one, while overbought Stochastic add to the trending outlook.

GBP/USD - British pound bulls once again found themselves trampled by the greenback longs as the pair tumbled thorough the psychologically important 1.7500 handle. As the price action remains on the side of the dollar longs, a further move to the downside seeing the pair take on the pound defenses around 1.7393, a level established by the October 12 daily low. A further break in the sterling's defenses will most likely see the dollar test pound defenses around 1.7284, a level marked by the 2005 low. Indicators are favoring dollar longs with both momentum indicator and negative MACD below the zero line, while neutral oscillators give either side enough room to maneuver.

USD/CHF - Swiss Franc longs felt the full brunt of the counterattack launched by the dollar bulls with the pair breaking above the 1.3000 handle and establishing a new 2005 high at 1.3115. As the Swissie longs try to recapture previously lost territory, a further move to the downside will most likely see the Swiss Franc bulls recapture the 1.3000 figure and push their way toward the 1.2886, a 20-day SMA. A further move to the downside will most likely see the Swissie longs lose momentum around 1.2771, a level marked by the 50-day SMA and is further reinforced by the 123.6 Fib of the 1.1477-1.3115 USD rally. Indicators are favoring dollar longs with both momentum indicator and positive MACD above the zero line, while neutral oscillators give either side enough room to maneuver.
 
USD/CAD - Canadian dollar bulls continued to tread sideways as the pair remained below 1.1857, a level marked by the 23.6 Fib of the 1.2730-1.1592 CAD rally after the greenback longs managed to push the pair back above the 1.1800 figure. A further move to the upside and a break of the Loonie defenses around 1.1857 will most likely see the pair head toward the 1.2027, a level established by the 38.2 Fib of the 1.2730-1.1592 CAD rally, thus seeing the Loonie bulls give up the control to the psychologically important 1.2000 handle. A further collapse of the Canadian dollar defenses will most likely see the greenback take on the Loonie offers around 1.2159, a 50.0 Fib of the 1.2730-1.1592 CAD rally. Indicators are favoring dollar longs with both momentum indicator and positive MACD above the zero line, while neutral oscillators give either side enough room to maneuver.

AUD/USD - Australian dollar bulls failed to hold on to the .7400 handle as the pair continued to head lower under the greenback onslaught.  A further move to the downside will most likely the US dollar take on the Aussie defenses .7286, a level established by the September 30, 2004 high, with a further move to the downside most likely seeing the pair tumble toward .7224, a level marked by the October 19, 2004 daily low. Indicators are diverging with momentum.  Indicators are favoring dollar longs with both momentum indicator and negative MACD below the zero line, while neutral oscillators give either side enough room to maneuver.

NZD/USD - New Zealand dollar bulls gave up more ground to the US dollar counterparts after the greenback longs launched a massive attack and pushed the pair toward the .6800 figure. A further move to the downside will most likely see the US dollar bulls take on the New Zealand dollar defenses around .6773, a level established by July 28 daily low, and with a break to the downside most likely seeing the pair tumble toward the .6687, a 2005 low. A further collapse of the Kiwi defenses will most likely see the New Zealand dollar longs retreat toward .6615, a level established by the July 19, 2004 daily low. Indicators are supportive of the New Zealand dollar longs with both momentum indicator and MACD treading above the zero line, while neutral oscillators give either side enough room to maneuver.

Sam Shenker is a Technical Currency Analyst for FXCM.