Technical Overview

• Japanese Yen Remains Above 117.00
• British Pound Struggles To Keep 1.7400
• Australian Dollar Bounce Around .7300

Traders Corner
As a trader I learned never to add to a losing position, a common mistake made by most traders. Yes I will agree with critics that will say that is will lower the breakeven level for the trade, but that only works when the price reverses its direction and heads in the direction of the trade. But what if the price continues to go against the trader, what now, losses are beginning to mount at a greater pace because trader increased the size, most traders just add to the position and hope for a break and a reversal, and that is where they get their break, its called a margin call, not the best stop a trader can use. The worst is seeing the market reverse direction and "runaway" from the trader. So the trader is now sitting with a big loss, being right in his or her initial judgment and seeing the market move their way adding an insult to the injury. DON'T BLAME THE MARKET FOR YOUR MISTAKES, BLAME YOURSELF. Mistake number one is adding size to a losing position, (if you are long/short and wrong don't add size until position shows you a profit) and next mistake blaming the market for your own mistakes. Please feel free to email me at sshenker@fxcm.com with your comments. 

EUR/USD - Euro bulls remained on the sidelines as the pair remained in a narrow trading range following the break below the 2004 Low at 1.1760. As the price action remains on the side of the greenback bulls, a further move to the downside will most likely see the dollar longs take on 1.1653, a level marked by October 22 daily low, and with sustained momentum taking on the single currency defenses around 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 oversold Stochastic gives euro longs a chance to retaliate.

USD/JPY - Japanese Yen longs continued to engage the greenback bulls as the price action remained subdued following the trip above the 118.00 handle. A move from current 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 116.02, 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 around 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 36.35 signaling an existence of a maturing trend not a direction of one, while overbought Stochastic adds to the trending outlook.

GBP/USD - British pound bulls managed to keep the pair above the 1.7400 handle despite another attempt by the greenback longs to push the pair toward the 1.7284, a level marked by the 2005 low. A further collapse of the cable's defenses will most likely see the pair head toward the psychologically important 1.7000 handle, a level which is being defended at 1.7086, a level marked by the November 20, 2003 daily low. A break below the 1.7000 figure will most likely see the greenback longs push their way toward 1.6877, a level established by the November 28, 2003 daily 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 continued to engage the dollar positions as the pair remained in the vicinity of the 2005 High at 1.3175, which was established during the previous trading session. As the Swissie longs try to recapture previously lost territory, a move to the downside will most likely see the Swiss Franc bulls push their way below the 1.3000 figure and aim toward the 1.2909, a 20-day SMA. A further move to the downside will most likely see the Swissie longs lose momentum around 1.2781, a level marked by the 50-day SMA and is further reinforced by the 23.6 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 decided to visit recently lost territory and pushed the pair below the 1.1900 handle only to find themselves on the other side of the US dollar counterattack. A move to the upside 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 managed to launch a counteroffensive and pushed the pair further above the .7300 handle. As US dollar longs resume their advance, a further move to the downside will most likely the greenback bulls 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 both oversold oscillators give Australian dollar longs a chance to retaliate.

NZD/USD - New Zealand dollar bulls managed to push back the US dollar longs above the .6800 handle only to lose their footing and tumbling back down. A further move below 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 diverging with momentum indicator below the zero line and positive MACD sloping downward toward the zero line, while oversold Stochastic gives Kiwi longs a chance to retaliate.

Sam Shenker is a Technical Currency Analyst for FXCM.