- WE'RE JUST RANDOM SPECKS OF DUST IN A TORNADO TO THE MARKETS .......
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Thursday, 10 June 2010

Currencies painting a more optimistic picture

We've been trading in a range for the last few weeks, and the very significant support level at the bottom of that range at the Feb low has been tested very hard, but so far at least, remains unbroken.

I have some doubts about the Feb low holding, but I'm hoping that it does hold for a few weeks, as it is the neckline for a a huge H&S forming with a target of 870, and also the lower trendline of a right angled and ascending broadening formation indicating to the samne area. If that support breaks before the right shoulder on that H&S pattern forms, then the case for reaching 870 over the summer would be greatly weakened, as the broadening formation alone is a considerably weaker pattern. 

For the moment there are some signs that we may be breaking back up towards the higher end of the current trading range on ES:


Oil has also been rallying strongly over the last couple of days:


Of the USD currency pairs, EURUSD, which has been the weakest of the ones I have been watching, is breaking into a very significant resistance area. If it clears it then we might see significant further upside:


GBPUSD was testing a significant overhead resistance trendline at the time I captured this chart and has since broken it convincingly. It has a solid support trendline:


AUDUSD has also broken significant overhead resistance and has recovered most of last week's losses now:


We may well see some pullback today after the strong gains overnight, but as long as ES (June) can hold the 1056 level, and EURUSD holds above 1.197, I'm cautiously bullish on these tentative signs of breaking up.

UPDATE: I've just been looking at ES again & we have a very large triangle on it that seems to be breaking up:

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