• Quiet Holiday Markets Give Us Time To Ponder the Big Picture
• Swissy's Weakness Opens The Door to a 1.6000 + EUR/CHF Move in Coming Weeks
• A Look at a Few Other Headlining Markets

We weren't kidding when we said quiet yesterday, we're we? Today is the kind of trading day when you put the intraday charts away and focus on your longer-term strategy by pulling out the big guns, such as the daily and weekly charts. We are transitioning out of spring trading and into summer where the weather, and hopefully the markets, begin to heat up.

The most resilient pair on the floor lately has been USD/JPY. Hardly anything has been given back after the repeated tests of the 2006 119.00 ceiling. If and when 119 gives way, there are a series of Fib Zones uptown at 122.50 average to target during the summer month. Each of the three Fib studies is color-coded and labeled with the price, the particular study used, and beginning and ending points under study.

The EUR/USD decline and subsequent retracements have been as orderly as you will find in the financial markets. Each of the three retracements progressed to within 0.3% of one another and we currently trade 3.9% from the 2005 lows. The 8-period ADX is no exception to the orderliness of the decline as you can clearly see the strength of each retracement weakening as the decline progresses. So what does this mean? Buyers are increasingly hesitant on each retracement, which hints towards the return of the powerful 2005 sellers beginning at around 1.3000.

USD/CHF was not as orderly as EUR/USD with its retracements during the 2005 Dollar recovery, but most notable of this chart is the incredible weakness of the Swissy against the USD. Notice we currently trade only 2.25% from the 1.3285 highs compared to EURUSD 3.9% from the lows. The dollar is being bought at almost twice the rate against the Swissy as it is compared to the Euro.

Our faithful readers know where I am going with this one. If Euro is twice as strong against the dollar than the Swissy is, the EUR/CHF chart should look like a recent oil chart, and it surely does. We are pulling back towards a nice 1.5650 support level, which sets up a solid long trade to target double top highs of 1.5870 and on through to Fib target 1.6125. We will monitor this one in coming weeks.

Let's take a look at a few other global financial markets recently in the news. The 10-year bond yield has been a headliner as of late after cracking the not only psychological, but technical, 5.0% yield mark. Bond sellers have their work cut out for them, however, as we can identify three sources of resistance consisting of the upper end of the parallel trend channel, 1.0 Fib Projection, and 2.0 Fib Ext.

Regrettably, oil has just this week broken downtrend resistance and is again targeting $70/barrel. I say regrettably because I recently bought an SUV in conjunction with a solid resistance level on the oil charts, which I thought would ultimately hold. Obviously I was wrong, anyone looking for a new car?

The effects of higher oil prices and 10-year yields exceeding 5.0% are beginning to expose weakness and resistance levels on the US equity markets. The measured move AB=CD corresponds with the upper end of the parallel trend channel at 1305 on the S&P 500 index, which ultimately failed. Currently we trade 1289 and are hovering above critical support 1280. Should 1280 give way, look to lighten up those stock portfolios to do some bottom picking in the bond markets if you see the 5.0% level looking a little heavy.

Todd Gordon is a Technical Currency Strategist and Fund Trader with GAIN Capital Group.

Disclaimer
The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.