Il.Dollar Turns Offered Across G10


The GBP surge, since bottoming at 1.43 in mid May has been impressive to say the least. We have commented before that price action on the GBPUSD is fairly quick between a 1.50 and 1.60 handle. The GBP bounced off of 1.59 yesterday but most analysts are looking for the Pound to easily retake 1.60. 1.5970 represents the Fibonacci 61.8% Retrace level generated from the 2009 high to the recent 2010 low. A break above that level should ensure the GBP reaches its target range between 1.60 and 1.64. The GBP has finished in the black for 9 straight sessions. Only a quick retrace back below the 200 day MA and the Fibonacci 50% level at 1.5640 could mute this rally. Lastly, the 50 MA is now set to break above the 100 MA which should support the bull rally.


Crude Oil finally broke above major Resistance at $79 a barrel. The moving averages are clearly discombobulated in a sign that it is neither a bull or bear market. However, there is a Step pattern present that suggested price was going to continue to rise as we made higher highs and higher lows (see chart). Oil touched just below $82 before retracing slightly, but the yesterday’s candle demonstrated that there are enough buyers in the market to sustain price above major Resistance. Buyers would like to see the 50 MA cross back above the 200 MA and 100 MA as a signal that price can support a major move higher.


Since there is high correlation between Oil and commodity currencies you would expect to find a similar price pattern on both sets of charts as price mimics one another. There are 2 points to note on the daily chart. Following the strong AUD rally that began at point “A” near .6300 the AUD topped out between .9300 and 9400 to form a quadruple top (see blue arrows). That level will now act as very strong Resistance against the AUD and may actually lead to profit taking as price continues to rise. This could cause the AUD to trade horizontally before eventually breaking higher or lower at the point of Resistance. The current trend as noted before is similar to Oil, as it is in the midst of a nice looking Step pattern which suggests that prices will continue to rise at least until major Resistance.

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