Understending market correlation is the base of all good trading; see what’s going on here: this is a weekly chart of AUD/USD where you can see not only the ascendant trend line, but also the Fibonacci rally of the fall from 0.98 to 0.60; pair has break above the 76.4% retracement of the rally, and remains there, while indicators show we are close to extremes and ready for a downside correction.

Turning to 4 hours charts, what do you see? pair has rebounded at the mentioned Fibo level, around 0.8940, several times this past weeks, yet each time, reaching lower highs; 200 EMA is there also, offering extra support in the zone, while price is ready to break lower. Of course, to call for a break of the level, we need to see at least, a daily candle close under it, yet if it does, it will likely push dollar higher across the board. Next key level/target if so, will be the ascendant trend line, around 0.8800 for this week.

You know I’m not a big fan of long term. Anyway If you want to see some smart points of view of where the pair could go, here you have the link to some ITC expects ideas: http://www.fxstreet.com/search/tags/?id=technicalforecast  that includes Rob Booker, Ashraf Laidi, Kim Cramer and James Chen forecasts; you can also joint a forum discussion about that subject following this link: http://www.fxstreet.com/forum/showthread.php?t=53208

Me? humm I’m closer to 1.35 than 1.75, yet for now, charts are saying another thing. So! untill I don’t have any technical confirmation seems I’m not able to take a long term decision in this pair.

Enjoy!

Same perspective here, Gbp looks much more bearish than Euro, after that weekly reversal candle that failed to break above the 50% retracement of the monthly rally. This week opening under the 20 SMA, was a first warning of a fall coming, as we always talk in the Wrap Up Webinar, Gbp works great with that MA. Pair is now, under the 38.2% of the rally. Weekly close under that 1.6030 area, will suggest pair should resume downtrend. Indicators are strongly bearish also, so let’s see today’s close.

For today, you can see that 4 hours charts are a bit over extended, suggesting some upside corrections, that anyway and till now, had retreat from the Fibo zone (Tks Puru!). Consider resistances for next hours at that area, followed by 1.6060 and 1.6110 neck of the head and shoulders daily figure, broken yesterday. Supports today, lie at 1.5970 and 1.5920 zone. Clearly under that level, 1.5860 is next target ahead of stronger 1.5750.

We have been following this monthly Fibo since long ago. Pair open this week above the 61.8%, confirming in a way, the bullish midterm trend. the level is around 1.4610, and we saw the pair reached that zone both yesterday and today early Asia, and for now, unable to break under. Still we are barely 60 pips away. So a weekly close under that level, and even better under 1.4550 support, will likely deny the upside continuation, while above that level, better above 1.4700, will confirm the upside continuation. Watch the zone, and the weekly close! If we turn to 4 hours charts, pair is slightly bearish, not quite clear, yet pointing to the downside. Supports from current level come at the very close 1.4660 zone, followed by 1.4610. Clear break under will send us to the 1.4550 strong zone, and I can’t see at this point, the pair falling further. To the upside, resistances come at 1.4700, 1.4735 and 1.4780.

EUR/USD keeps pushing higher, and having reached this 1.4800 level, seems pretty overbought, yet still no signs of reversal here. We have two main targets to watch from current level to the upside: first one is 1.4867, past Septemeber 2008 highs. Above that, 1.4970 area  is next resistance to consider, ahead of the 1.5250 level. Yet with weekly charts also overbought, we are approaching to a big downside corrective movement here. First support to consider will be the 61.8% retracement of the monthly fall, now at 1.4620 area, followed by the 1.4410/40 area. Clear break under that could send the pair around 1.4100 where we have 20 SMA along with the 50% of the same rally, and a good number of weekly highs and lows. Seems a bit too late to mount in the bullish rally, yet a bit to early also to talk about a reversal. Watch the levels!

GBP/USD remains capped under 1.6200 level, holding the bearish bias in 4 hours and daily time frames, although rally seems a bit over extended to the downside. Key level to watch is the 1.6100/10 area, September lows, also 200 EMA in the daily chart. Daily close under that level, will likely confirm the head and shoulders figure clear in daily chart, and trigger more bearish momentum in the pair ( the figure has a 900 pips height between neck and top of head). Anyway and for next hours, supports lie at 1.6135 today’s low, followed by the mentioned 1.6100 area, ahead of 1.6060 level. Resistances on the other hand lie at 1.6200, 1.6230 and then the 1.6280 zone.

Some charts, don’t need too much explanation: S&P in the weekly, is breaking above the 61..8% Fibonacci retracement of the last fall. Weekly close above that 1060 level, could confirm further rises in indexes, despite September is usually consider a negative month.

GBP/USD continues under selling pressure, approaching to key 1.6600; if breached, next key support level lies at 1.6550 zone, 20 SMA in the daily chart. Under that level, and following strong come back from 1.7045 that could signal a potential turn top, the pair can retest the ascendant trend line coming from March lows at 1.3653 in the mi term, this week around 1.6380. If price action takes the pair under mentioned trend line, longer term bias will turn bearish, with 1.6200, base of previous range, 1.6000 and 1.5700 as next support zones to consider.Daily indicators have turned quite bearish in the pair, so the mentioned 1.6550 SMA in the daily will be key. Watch for the daily close under that level, to trigger some strong selling.

For today,  resistances lie at 1.6650/60 zone, followed by 1.6700. Confirmations above this level could trigger some upside correction as pair remains over sold after past Friday’s rally. Watch for 1.6742, previous yearly high, as probable target above the mentioned 1.6700. Supports come at the mentioned 1.6550 followed by 1.6520 and finally 1.6470.

Both Euro and Gbp reached fresh year highs early today, Euro at 1.4437 and Gbp at 1.6986. Oil barrel break also above previous high, while gold approached to key 960.00/oz area. At this point, the big dollar sell off seems longing for a correction, thus from a technical perspective, there is no signs yet. Strong momentum remains here, and majors will likely to made some short corrections, before regaining steam in Asia. Around 22.30GMT, I will be reviewing live, market conditions and probably majors behaviour for the next 24 hours. You can join me following this link:

http://www.fxstreet.com/live/sessions/session.aspx?id=3f237943-d403-4f6a-94a3-e041616387ea

Take a look at this daily chart, and you will see what I see: USD/CAD is barely 40 pips away from the 1.0780 lows, strong support zone for the pair. RSI around 24 in the daily, also show extremely over sold conditions in the pair. At this point we are accumulating also a 900 pips straight fall. Do you signs of reversal or an upside correction? I don’t. If pair manages to break under that 1.0780 area, downside pressure could accelerate and send the pair close to the lows 1.0600. The behaviour of the pair, is the key to determinate if we are going to see a strong rebound to the upside or not. As longer we see price hovering around actual level, bigger are the chances of a break. I have an eye on oil also: barrel is at $ 69.50 and the year high is around $ 72.70. If oil continues it’s rally ( and should approach to $ 75.00) USD/CAD will continue falling despite technical indicators or extreme conditions.