Candlesticks Point to Correction of Dollar Strength.Summary: Our long-term short Euro position added another 282 pips to overall gains as the US Dollar remained strong last week. We now look for a correction of the... Our long-term short Euro position added another 282 pips to overall gains as the US Dollar remained strong last week. We now look for a correction of the greenback's rally to offer favorable entry points to enter shorts against the other major currencies. Having identified the relevant support levels in last week's report, we are now beginning to see the pullback Pullback A falling back of a price from its peak. This type of price movement might be seen as a brief reversal of the prevailing upward trend, signaling a slight pause in upward momentum. begin to materialize with the New Zealand dollar Noun 1. New Zealand dollar - the basic unit of money in New Zealand dollar - the basic monetary unit in many countries; equal to 100 cents pairing leading the way once again. EUR/USD Has the Euro retracement Retracement A reversal in the movement of a stock's price, countering the prevailing trend.  Notes: An example might be market risk causing a stock's price to pull back. finally arrived? We sold EURUSD EURUSD Euro to US Dollar (foreign currency exchange) below a long-term trend line in place since August having identified a Long Black Candle that closed beyond support. Last week, we found the Euro below 1.49 and opted to continue holding as the trend develops, aiming for a "soft target" below 1.47. The week closed at 1.4673, bringing our total floating profit to 837 pips. Current positioning sees EURUSD find a supporting trend line that has marked weekly lows since October 2006. The daily chart sees today's candle close as a bullish Inverted inverted reverse in position, direction or order. inverted L block a pattern of local filtration anesthesia commonly used in laparotomy in the ox. Hammer (not shown), suggesting we may see a bounce higher from here. We see a move higher as corrective, with the broad trend firmly bearish Bearish Words used to describe investor attitude. A bearish investor believes that a particular asset or the market as a whole will decline in value. bearish in the medium term. Indeed, the US Dollar Index broke a downward-sloping trend line in place since 2005, pointing to continued greenback greenback, in U.S. history, legal tender notes unsecured by specie (coin). In 1862, under the exigencies of the Civil War, the U.S. government first issued legal tender notes (popularly called greenbacks) that were placed on a par with notes backed by specie. strength in the months to come. A pop-up to resistance at 1.4922 will be treated as a selling opportunity where we will look to add to our position. EUR/USD Strategy 1. Continue holding short EURUSD at 1.5510, looking to add near 1.4922. 2. Keep stop-loss at break-even. 3. Next "soft target" lies near 1.4370. For more resources on the EURUSD, please visit the DailyFX Euro Currency Room. GBP/USD Will Pound slow down enough to offer entry? The speed of the Pound's selloff sell·off n. The sale or disposal of a relatively large number of stocks, bonds, or commodities that often causes a sharp decline in prices. Noun 1. has persistently failed to offer entry opportunities, skewing risk-reward with each successive leap downward. Last week, we indentified GBPUSD GBPUSD British Pound Sterling to United States Dollar (foreign currency Eexchange) trading just above support at a trend line in place since January 2002. Price would go on to break below this juncture, closing the week at 1.8625. Looking ahead, we see the daily chart showing a very similar Inverted Hammer to that indentified for EURUSD (not shown). We will look for a reversal higher to find resistance near 1.89 and enter short targeting a breach beyond the 1.82 level. GBP/USD Strategy Flat. Updates will be posted throughout the week at the Candlestick Candlestick A price chart that displays the high, low, open, and close for a security each day over a specified period of time. forum. For more resources on the GBPUSD, please visit the DailyFX British Pound Currency Room. USD/JPY Bearish correction gaining traction Last week, we identified a Hanging Man candlestick on the USDJPY daily chart, suggesting the possibility that the rally was ready for a corrective decline. A pause in bullish momentum indeed materialized, but the pair failed to succumb to selling pressure. Indeed, current positioning finds prices largely in the same place they were last time around. Looking ahead, we see price action take on a Rising Wedge formation since mid-March. Current positioning sees USDJPY just below resistance and showing a Harami reversal pattern reversal pattern In technical analysis, a chart formation that indicates a market top or a market bottom. A reversal pattern, which usually occurs after a major movement in the price of a stock or in the entire market, is an indication that investors should . A reversal may be brewing following last week's consolidation, though it must be kept in mind that the Harami pattern is considered a weak signal and requires confirmation. In any case, our bias remains bullish as the US dollar index has broken above a downward trend line in place since 2005. We will for a pullback as a buying opportunity, USD/JPY Strategy Flat. Updates will be posted throughout the week at the Candlestick forum. For more resources on the USDJPY, please visit the DailyFX Japanese Yen “Yen” redirects here. For the other use, see Yen (disambiguation). “JPY” redirects here. For the Australian singer with the same moniker, see John Paul Young. Currency Room. USD/CAD Major resistance to prompt correction Last week we focused on the long-term picture for USDCAD, pointing out that a weekly chart reveals the pair positioned ahead of a resistance trend line in play since May 2004. Price action attempted to extend upward momentum but only reached as high as 1.0726. Current positioning sees the pair within 15 pips of last week's report. Looking ahead, we see a corrective downturn increasingly likely. The daily chart shows an Evening Star below resistance (not shown), hinting a selloff lies ahead. Our ideal scenario is a reversal to resistance-turned-support at 1.0376. We will look to go long here expecting a break of resistance to yield a test of the 1.1000 level. USD/CAD Strategy Flat. Updates will be posted throughout the week at the Candlestick forum. For more resources on the USDCAD, please visit the DailyFX Canadian Dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents Currency Room. AUD/USD Support found-for now Last week, we suggested that the momentous AUDUSD selloff was to see support at 0.8590, a level marked by a trend line that has been in place since March 2006. We suggested looking for Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. a retracement from this level to yield a short entry point targeting a continuation of bearish momentum to challenge multi-year lows. Indeed, downward momentum appears to be stalling. In a similar fashion to the Euro and the Pound, the daily AUDUSD chart is now showing an Inverted Hammer (not shown). We will look for a reversal to reach the 0.8870-0.8900 area and monitor for signs that resistance is being hit. We expect the subsequent down swing to break trend line support to test the 0.83 mark. AUD/USD Strategy Flat. Updates will be posted throughout the week at the Candlestick forum. For more resources on the AUDUSD, please visit the DailyFX Australian Dollar Noun 1. Australian dollar - the basic unit of money in Australia and Nauru dollar - the basic monetary unit in many countries; equal to 100 cents Currency Room. NZD/USD Leading other majors to retrace greenback rally Last week we saw NZDUSD standing directly at the site of a supporting trend line stretching back to September of 2001. As with the other majors, we were looking for a bounce here to offer a favorable short entry point. NZDUSD had led the other majors in showing aggressive US Dollar strength and now seems to be doing the same with the eventual corrective rally. The weekly chart is now showing a large Hammer right at trend line support, suggesting a sizable counter-trend rally may be soon to follow. We will monitor price action to indentify where the correction will meet resistance to enter short aiming for NZDUSD to eventually decline to 0.6450. NZD/USD Strategy Flat. Updates will be posted throughout the week at the Candlestick forum. For more resources on the NZDUSD, please visit the DailyFX New Zealand Dollar Currency Room. To contact Ilya regarding this or other articles he has authored, please email him at ispivak@dailyfx.com A[umlaut umlaut (  m`lout) [Ger.,=transformed sound], in inflection, variation of vowels of the type of English man to men. ] 2008 Al Bawaba (Albawaba.com)
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