EUR/USD has descended within the past couple of days to hit a key uptrend support line. For the current technicals on this pair, please click here for Friday’s Chart of the Day.

Price action on the USD/CAD (a daily chart of which is shown) has just bounced up off a key uptrend support line, as well as a horizontal support/resistance level in the 1.2100 region. The pair’s most recent bullish move failed to reach all the way up to the triple-tested highs around 1.3000, stopping short at 1.2765. Therefore, in the event of continued bullishness off the recent uptrend line bounce, the region surrounding 1.2765 should pose strong resistance to any further upside move towards the triple-tested highs. To the downside, the static 1.2100 region and the dynamic uptrend support line should continue to serve as strong support factors going forward. From a technical perspective, the bias currently appears somewhat bullish, though we should soon be seeing a sideways consolidation forming.

GBP/USD (a daily chart of which is shown) has made a clear 3-bar bounce off the recent 23-year low of 1.3500, as of Wednesday morning. In the process, price has broken back up above the bottom border of the wedge formation that it broke below just last week. Price action has now reached the level of the last significant swing low in the pair before the 23-year extreme low was hit. Are we now seeing a major bottom occurring in the pair? Momentum still appears to be to the upside, and any continued bullishness that breaks above the 1.4400 region should provide more strength to the bottoming outlook. If a break above this level occurs, price could eventually target the 1.5300 region to the upside. And any substantial move above this further resistance level should provide stronger confidence that a reversal could indeed have begun. Of course, major support to the downside continues to reside in the 1.3500 extreme low region.

After tentatively breaking above short-term downtrend resistance, price action as of early Tuesday morning rose up to hit and slightly exceed significant further resistance in the 1.3300 region before essentially being rejected by that price level. Momentum still appears, however, to be biased somewhat towards the upside. Any subsequent strong break and close above this 1.3300 level could eventually work its way up towards the 1.3750-1.3850 resistance zone. In the event of an extension of the 1.3300 price rejection, key support below the current price action resides around the 1.3050 region.

Price action on USD/JPY, a daily chart of which is shown, has tentatively retreated from the 13-year low that was precisely double-tested just last week. In the process, the pair has reverted back up to a short-term downtrend resistance line that extends from the 94.62 swing high reached in the beginning of the year. Price is currently still considered to be consolidating near the long-term lows, but if this downtrend resistance is broken to the upside, the 91.00 level should serve as strong resistance to the upside. A break above that should meet even stronger resistance in the mentioned 94.62 region. And any strong break above this 94.62 level could confirm a potential double-bottom reversal. To the downside, of course, is the ever-present 87.00 extreme support region, a substantial breakdown of which could presage a major downward move.

Happy Chinese New Year! The Year of the Ox officially begins on Monday, January 26th. What do we have to look forward to in the forex market for the beginning of this Chinese New Year? Here are some major forex price levels to watch for the upcoming week of Jan 26-30, 2009:

EUR/USD - 1.2700 / 1.3300
USD/JPY - 87.10 / 91.00
GBP/USD - 1.3502 / 1.4200
USD/CHF - 1.1480 / 1.1800

The EUR/USD has just reached a key dynamic support level as of Friday morning. For the current technicals on this pair, please click here for Friday’s Chart of the Day.

Price action on the GBP/USD has descended to hit a new 23-year low as of Friday morning. The fact that these depths (around 1.3500) last occurred in 1985 makes the current price action virtually unprecedented. At this point, we should be seeing some consolidation above the 1.3500 low with upside resistance around the bottom border of the wedge, which is currently in the 1.4200 region. Of course, the major event to watch for would be any subsequent break below 1.3500, which could carry enough bearish momentum to extend the decline down to a potential support target in the 1.3300 region.

Yet again, price action on USD/CAD appears to be targeting the 4-year high in the pair (around 1.3000) that has already been triple-tested within the last several months. At the current juncture, price is traveling up a steep uptrend support line, with the key 1.3000 extreme in its sights. If price loses its bullish momentum, as technical oscillators are suggesting, and breaks down below this steep uptrend line, price should eventually find major support in the 1.2100-1.2150 zone.

Wednesday’s price action on USD/JPY (a daily chart of which is shown) descended all the way down almost precisely to the 13+ year low in the pair that was just established in mid-December. After hitting this support low (just above 87.00), price was rejected and rose back up substantially. Price action as of Thursday morning has shown the pair displaying much of the same bearishness that occurred on Wednesday. Whether or not the pair is able to break below the 87.00 support is the big question of the week. This is definitely the price level to watch as we end this week and look forward to next week. A break below this extreme support level would have nothing in the way of recent precedent, so further support to the downside is difficult to determine on a concrete basis. A pronounced bounce up off the 87.00 support, though, should meet substantial resistance in the 91.00 region.