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The 318 pip drop in the Euro dollar on August 8/08 was the largest one day move either up or down for this currency pair in years.
The move down was not a surprise to me but the speed of it was. I had expected at least some kind of upward bounce at the natural support level at the bottom of the 3 month trading range around 1.5300 and the 200 day moving average.
Since the one day huge drop the market has moved tentatively down to the second area I mentioned in last weeks column, around 1.5000. A spike down encountered Euro buyers at 1.4812.
This week should produce more consolidation, which will be sideways and moderate upside movement, from around it’s present value (1.4900 at time of writing), to an anticipated maximum of 1.5260-1.5300, where there is strong resistance. A close above 1.5040 will suggest that such a correction is underway. Otherwise the main pressure will be down.
Eventually the support between 1.4800 – 1.4900 may erode resulting in a drop to the next major support level between 1.4350 – 1.4450.
The 318 pip drop in the Euro dollar on August 8/08 was the largest one day move either up or down for this currency pair in years.
The move down was not a surprise to me but the speed of it was. I had expected at least some kind of upward bounce at the natural support level at the bottom of the 3 month trading range around 1.5300 and the 200 day moving average.
Since the one day huge drop the market has moved tentatively down to the second area I mentioned in last weeks column, around 1.5000. A spike down encountered Euro buyers at 1.4812.
This week should produce more consolidation, which will be sideways and moderate upside movement, from around it’s present value (1.4900 at time of writing), to an anticipated maximum of 1.5260-1.5300, where there is strong resistance. A close above 1.5040 will suggest that such a correction is underway. Otherwise the main pressure will be down.
Eventually the support between 1.4800 – 1.4900 may erode resulting in a drop to the next major support level between 1.4350 – 1.4450.
Daily EUR/USD chart as at 14 August 2008 using NextVIEW Advisor
TECHNICALS
NextView RSI – this indicator is well below its’ 20 level (oversold), for the first time in 10 years.
MACD – oversold – this does not necessarily mean that a strong upward move will result. Generally, however, a period of consolidation occurs following major moves of the market.
Trend Line – the 2 ½ year rising trend line may also become a support target as it rises to the 1.4400+ area over the next several days.
Li’s Pivot Predictor (exclusive to NextView charts) supports my view that nearby resistance is around 1.5300.
R1 – 1.5230 – 1.5300
S1 – 1.4800
S2 – 1.4350=1.4450 (not shown on chart)
NextView RSI – this indicator is well below its’ 20 level (oversold), for the first time in 10 years.
MACD – oversold – this does not necessarily mean that a strong upward move will result. Generally, however, a period of consolidation occurs following major moves of the market.
Trend Line – the 2 ½ year rising trend line may also become a support target as it rises to the 1.4400+ area over the next several days.
Li’s Pivot Predictor (exclusive to NextView charts) supports my view that nearby resistance is around 1.5300.
R1 – 1.5230 – 1.5300
S1 – 1.4800
S2 – 1.4350=1.4450 (not shown on chart)
US Dollar / Chinese Yuan (USD/CNY)
The RMB currency has remained surprisingly resilient against the USD, the latter making only modest gains compared with the huge gains against several other major currencies.
Resistance at 6.9592 has not yet broken, but will likely be tested again soon.
A convincing close above R1 could eventually target the R2 area around 6.90 – 6.93.
Daily EUR/USD chart as at 14 August 2008 using NextVIEW Advisor
TECHNICALS
MACD – in positive territory, but weakening.
Commentary and Analysis by Don Schellenberg
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