The Federal Open Market Committee does its thing Tuesday, even if it does nothing. And so don't rush to attribute any ensuing heavy moves to the committee. In fact, it's the charts that say that long-term money market moves may come of it all.
For example, the engaging technical feature of USD/JPY is its downtrend between first-quarter 1971 and second-quarter 1995. The dollar finally broke out of that downtrend in 1997 when it took out Y119.61 resistance. But so far, - that is, 10 years later - that breakout has come to nothing. Rather, what has developed in the past decade is a grand consolidation between Y147.71 and Y101.22.
The point is that Y119.61 is an effective level for long-term traders, and that current trading near Y118.50 means that Y119.61 is still resistance. The dollar, in this context is vulnerable to a downtrend as low as Y108.15. I've recently suggested a move down to Y112.49 anyway,
Such deep moves may not come to pass, of course, but short-term traders, who can reasonably judge the dollar to be weak below Y118.88 should remember that the long-term charts are weak.
If the current, nearly three-week downtrend is extended by a move below Y117.16 then the next potential bottom would be at Y116.97 support, perhaps at Y116.71-Y116.47 support.
Euro Weak Too
And if the dollar is basically weak against the yen, still the euro may be set up to dip against the dollar.
EUR/USD's uptrend since November 2005 stalled about three weeks ago after the euro failed a test of $1.3843 resistance. Current trading not quite a penny below resistance suggests a dip to $1.3641-$1.3616 support.
In any case, the euro wouldn't be trending higher against the dollar on the daily chart unless $1.3854 resistance was taken out.
Treasury Yields Set Up For Long-term Moves
Depending on the reaction of Treasury yields to the FOMC policy announcement, a short-term consolidation may morph into a long-term move.
The U.S. 10-year yield is effectively trading in a wide technical band between 4.673%-4.643% support and 4.845%, which is a technical breakout point on the daily chart. The signal point within that range is 4.735%, which is virtually the yield's current trading level.
Trading above 4.845% would give the yield a shot at 4.910%-area resistance, which is a technical breakout point on the monthly chart. On the other hand, a move below 4.643% would point the yield down to 4.581%, which, conversely, is the technical breakdown point on the yield's monthly chart.
S&P So Far Is So Near A Breakout
The closely followed S&P 500 index is practically trading now at the 1466.64 technical level. Lower trading would be targeting 1446.57 initially. On the other hand, decisive trading above 1466.64 would be a technical breakout on the daily chart.
For example, the engaging technical feature of USD/JPY is its downtrend between first-quarter 1971 and second-quarter 1995. The dollar finally broke out of that downtrend in 1997 when it took out Y119.61 resistance. But so far, - that is, 10 years later - that breakout has come to nothing. Rather, what has developed in the past decade is a grand consolidation between Y147.71 and Y101.22.
The point is that Y119.61 is an effective level for long-term traders, and that current trading near Y118.50 means that Y119.61 is still resistance. The dollar, in this context is vulnerable to a downtrend as low as Y108.15. I've recently suggested a move down to Y112.49 anyway,
Such deep moves may not come to pass, of course, but short-term traders, who can reasonably judge the dollar to be weak below Y118.88 should remember that the long-term charts are weak.
If the current, nearly three-week downtrend is extended by a move below Y117.16 then the next potential bottom would be at Y116.97 support, perhaps at Y116.71-Y116.47 support.
Euro Weak Too
And if the dollar is basically weak against the yen, still the euro may be set up to dip against the dollar.
EUR/USD's uptrend since November 2005 stalled about three weeks ago after the euro failed a test of $1.3843 resistance. Current trading not quite a penny below resistance suggests a dip to $1.3641-$1.3616 support.
In any case, the euro wouldn't be trending higher against the dollar on the daily chart unless $1.3854 resistance was taken out.
Treasury Yields Set Up For Long-term Moves
Depending on the reaction of Treasury yields to the FOMC policy announcement, a short-term consolidation may morph into a long-term move.
The U.S. 10-year yield is effectively trading in a wide technical band between 4.673%-4.643% support and 4.845%, which is a technical breakout point on the daily chart. The signal point within that range is 4.735%, which is virtually the yield's current trading level.
Trading above 4.845% would give the yield a shot at 4.910%-area resistance, which is a technical breakout point on the monthly chart. On the other hand, a move below 4.643% would point the yield down to 4.581%, which, conversely, is the technical breakdown point on the yield's monthly chart.
S&P So Far Is So Near A Breakout
The closely followed S&P 500 index is practically trading now at the 1466.64 technical level. Lower trading would be targeting 1446.57 initially. On the other hand, decisive trading above 1466.64 would be a technical breakout on the daily chart.
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