Technical Analysis – EURUSD Monthly: fresh 5-year highs as dollar move looks stretched
December 19, 2013 10:03 am
(Click to enlarge)
On the back of the Fed decision, the US dollar broke to a fresh 5-year high versus the yen, having traded at a level of 104.35. This is the highest for the US dollar since October of 2008.
In order to derive some guidance for possible future targets should the dollar uptrend continue, the long-term monthly chart can offer some clues.
The first target could be the high that was registered during August of 2008, around the 110.60 level. A clearing of that level would translate into a 6-year high. 110.60 is also very close to the 111.60 level, which is the 50% retracement of the down move from the 147 yen high of 1998 to the 75.5 yen low of 2011.
Following a break of the 111 level, the next crucial long-term level would be 124, which is the June 2007 high before the financial crisis set in. A break of that level would lead to an 11-year high.
More immediately however, the dollar move looks a little stretched – at least on the monthly chart. The RSI is overbought at 75.9 and speculative short yen positions are at 6-year highs at Chicago’s International Monetary Market.
Any pullback could find support at 97.87, which is the level of the 12-month moving average or at 93.3, which is the 38.2% Fibonacci retracement level of the two-year move from 75 yen to 104.
(Click to enlarge)
On the back of the Fed decision, the US dollar broke to a fresh 5-year high versus the yen, having traded at a level of 104.35. This is the highest for the US dollar since October of 2008.
In order to derive some guidance for possible future targets should the dollar uptrend continue, the long-term monthly chart can offer some clues.
The first target could be the high that was registered during August of 2008, around the 110.60 level. A clearing of that level would translate into a 6-year high. 110.60 is also very close to the 111.60 level, which is the 50% retracement of the down move from the 147 yen high of 1998 to the 75.5 yen low of 2011.
Following a break of the 111 level, the next crucial long-term level would be 124, which is the June 2007 high before the financial crisis set in. A break of that level would lead to an 11-year high.
More immediately however, the dollar move looks a little stretched – at least on the monthly chart. The RSI is overbought at 75.9 and speculative short yen positions are at 6-year highs at Chicago’s International Monetary Market.
Any pullback could find support at 97.87, which is the level of the 12-month moving average or at 93.3, which is the 38.2% Fibonacci retracement level of the two-year move from 75 yen to 104.
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