Technical Overview

• Euro Aims For 1.1800
• Swiss Franc Breaks Below 1.3100
• Canadian Dollar Remains Unchanged

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 it 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 continued to tread sideways as the pair remained confined to a tight trading range. A move on the part of the euro longs will most likely see the pair head toward the 1.1867, a July 5 daily low and a previous 2005 low, with reversal most likely seeing the pair move to the downside and most likely seeing the dollar longs take on 1.1653, a level marked by October 22 daily low. A sustained momentum to the downside will most likely see the greenback 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 neutral oscillators give either side enough room to maneuver.

USD/JPY -  Japanese Yen longs remained confined to a tight trading range that dominated the price action from the beginning of the week with neither side gaining an upper hand. A move to the downside 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 116.24, a level marked by the October 27 daily high. 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 114.62, a level established by the October 25 daily low. 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 push the pair toward the psychologically important 1.7500 handle during the latest counterattack against the advancing dollar longs. A break above 1.7500 will most likely see the cable longs push their way toward 1.7636, a level marked by the 20-day SMA, and with a further move to the upside stalling around 1.7737, a level established by the 23.6 Fib of the 1.9219-1.7284 USD rally. A reversal will most likely see the dollar longs push the pair back below the psychologically important 1.7500 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/CHF - Swiss Franc longs made skidded above the 1.3100 handle only to regain their footing and pushed the greenback toward the psychologically important 1.3000 handle. As the Swissie longs recapture previously lost territory, a further move to the downside will most likely see the Swiss Franc bulls push their way below the 1.3000 figure and aim toward the 1.2919, a 20-day SMA. A further move to the downside will most likely see the Swissie longs lose momentum around 1.2779, a level marked 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 continued to bounce around the 1.1858, a level marked by the 23.6 Fib of the 1.2730-1.1592 CAD rally, as price action in the pair remained nonexistent. Another attack by the US dollar longs 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 sustain the momentum of their counteroffensive and tumbled back down towards 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 oversold Stochstic gives the Aussie bulls a chance to retaliate.

NZD/USD - New Zealand dollar bulls proved to be more successful than their antipodean neighbor in pushing the back the greenback longs toward the .6900 handle. A further move to the upside will most likely see the Kiwi longs test the US dollar defenses around the .6930, a level marked by the October 19 daily low, and with subsequent reversal targeting the 6800 figure. Indicators are favoring the US dollar longs with both momentum indicator and negative MACD below the zero line, while neutral oscillators give either side enough room to maneuver.

Sam Shenker is a Technical Currency Analyst for FXCM.