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EURUSD
The armor has been dented.  The first signs of damage to the upward assault have been marked on the shield and the first wound delivered.  Why?

Since the pair broke above the weekly 20ema and the Kumo, there has not been one weekly loss this heavy on a closing basis.  On top of that, in the last 33 weeks, we’ve only had two other closes (on a weekly basis) this strong or more.  On top of this, in comparison to the other two candles of this magnitude, this one opened closer to its high and closed closer to its low so the selling pressure this week was most consistent.

Does this mean I want to be short EURUSD yet?  Not necessarily.  Being long USD is not my favorite prospect at the moment and needs more confirmation.  Am I open to being short now?  Yes, with more confirmation since the armor has been weakened.

Some options for shorting would either be towards the previous yearly highs or on a weekly close below the Tenkan (has not happened in 27 weeks).  Options for going long would be on a bounce off the weekly Tenkan or on the 20ema.

Overall Kumo structure suggests medium to long term the trend should remain up.  But there the price action suggests a short term correction could be underway.  Be warned as overall prospects for being bullish are not as golden as they were before.

GBPUSD
The picture for this pair did not get any clearer after last weeks close.  If anything, it made it more annoying as it posted an inside week.  The good thing about this is probabilities suggest this week will be an outside one.  Themalo thing about this is the direction of which the break will occur is less clear from the price action.  The Tenkan, 20ema and Kijun are coming closer suggesting decision has yet ot really manifest itself so building heavy positions is not recommended until we have a solid break, particularly above 1.6750ish or below 1.6200.

Price is still inside the kumo and if we do not get a close outside of it on either side by year end, the beginning of the next year should get messy till early summer.  Overall, until a break of the aforementioned levels, we recommend shorter day trades on this while not holding any positions beyond an intraday session.

AUDUSD
The outlook on this pair is similar than the EURUSD except the pair had its strongest open-close loss in the last 33 weeks so the stakes areup’d a bit.  The pair has found buyers at the weekly Tenkan so this should inspire bulls for now.  Pero, another failure at the yearly top made two weeks ago, or at a fib level from that top (.9326) to the current tenkan reading would strengthen the bears claws.

Our strategy for this is the same as the EURUSD on both sides of the market along with the overall medium/longer term outlook.  The only thing which would change our long term view would be a weekly close below theKumo but we place this at about a <20% chance of happening and feel overall any strong dips are opportunities to buy AUDUSD for another run up to an eventual parity which we feel will happen in 1st or 2nd Q of 2010 since the overall weekly kumo is building over time.

USDCAD
Producing back to back weekly gains - something it has done only 3x in the last 34 weeks the next test for the bulls is the weekly 20ema, an entity which strongly rejected it the last time.  The difference this time is a major fib for the swing move down from 1.3000 was right there at the 20ema when it happened.  On top of this, the weekly advance prior to attacking the 20ema the last time was smaller in nature than the current week that just closed suggesting there is more power behind this move than the last.  This is also represented mathematically in the last major attack on the 20ema was 580pips over 4weeks while this last advance was roughly 580 pips over two weeks - an important fact to be considered.

One other important note was the kumo wherein last time it was much thicker and in the zone of the 20ema whereas now its further away from price (less of a threat) and thinner in nature so a reversal is much more likely to happen now than ever.  If it does not break the kumo to the upside between now and end of March next year, chances for bulls to establish control weaken.

NZDUSD
The funny thing about last week was that the pairs that were doing the best against the USD suffered the most while the pairs doing the worst endured the least amount of torture.  Not really funny as it makes sense from an order flow perspective, pero - the kiwi really took one on the chin uppercut style.  In fact, it was the only trending pair which closed below the weekly tenkan which is the most damaging to the bulls technically.  So far, the pair has now treated the tenkan as resistance while making modest gains.  If the current model plays itself out with the pairs that had done the best against the USD are now going to fare the worst, the kiwi is in for a larger fall.

Downside tests are the 20ema, something not seen since the first week in may so any test if this should be very interesting with a close below likely resulting in a drastic and quick fall to the kijun causing a technical event to force bulls to exit most of their positions.  Overall, we feel the medium to longer term bullish structure is in place as the kumo is lo mismo to the AUDUSD and supports an upside advance as long as no weekly close below the kumo happens between now and early March 2010.  Dips that travel to the south will likely return north for an attack upon 82 cents (the high from 2008).

Chris Capre is the current Fund Manager for White Knight Investments (http://whiteknightfxi.com/). He specializes in the technical aspects of trading particularly using Ichimoku, Momentum, Bollinger Band, Pivot and Price Action models to trade the markets. He is considered to be at the cutting edge of Technical Analysis and is well regarded for his Ichimoku Analysis, along with building trading systems and Risk Reduction in trading applications. For more information about his services or his company, visit http://2ndskiesforex.com

In case you were kidnapped, heavily inebriated or on prescription drugs for the last, oh say 33 weeks, the AUDUSD has been in an uptrend.  On top of that, they recently did something no other central bank has done lately - raise their interest rates.  This has separated them from the rest of them and added nitro to the trend.  But, the question has to be asked, is there more to this uptrend?  If so, should be buying into the rest of the week now that we have hit hump day?

Statistically speaking - No!

Lets get into the numbers which suggest why we should not be buying.

Since March 6th of this year, the pair has had 31 weeks of price action behind it

7 losers

24 winners

Do we want to be buying as our general approach to the AUDUSD?
Verdict = Yes

Average weekly range (high to low) for those 31 weeks = 341pips

High value = 452

Low value = 135

# of weeks it has closed above the 341 avg. = 20 (65%)
Current weekly range = 314pips

Difference to the avg. = 27pips

Difference to the High = 138pips
Thus, if we were to this week hit or equal the weekly high, there is a potential for 138pips of profit…not bad, but downside risk is well over 200pips.

What is more interesting is how price has been behaving as of late.  Thus, we present exhibit A which is the weekly chart on the AUDUSD

Notice how the pair has behaved in the beginning of the uptrend.  The candles were closer towards the highs and much larger in high/low range.
However as of late, the closes have been much closer to the opens with the open/close gains being smaller (current week excluded).  Also, there are

wicks or retracements on every single week (except one on sept. 11th week) since the week ending July 31st (over 9 weeks ago).  Thus, statistically,

88% of the time the pair has retraced on any given week suggesting waiting for a pullback before entering has been the way to play.

Now take a look at exhibit B, a graphical representation of how many pips the pair has averaged (weekly basis) outside or above the 341pip avg. and how much below.

The weeks of the trend are from left to right with week 1 being March 6th.  The numbers on the y-axis represent in 10s of pips (.001 = 10 pips) how many pips the

week was able to post above the the statistical average.

Notice in the beginning of the chart, the line is above 0, showing the pair was producing weekly ranges .002 (20pips) outside the weekly average range from high to low.

Not surprising as the trend has some good power once it clears the weekly 20ema.  However, notice how the line falls off and on a week to week basis, the ranges have been getting

smaller suggesting the trend is losing steam.  Not necessarily that its changing, but just that we should expect to make less on a weekly basis out of the pair, particularly on an open to

closing basis.  Important to know.

Thus, considering that only out of 24 positive weekly closes, none of them since July 17th have closed above the weekly average (341pips) and the current week has already moved 314pips,

do we really want to be adding on large positions around the current levels on the AUDUSD?

Verdict = No

Solution = statistics say wait for a pullback before buying.

Chris Capre is the current Fund Manager for White Knight Investments (http://whiteknightfxi.com/). He specializes in the technical aspects of trading particularly using Ichimoku, Momentum, Bollinger Band, Pivot and Price Action models to trade the markets. He is considered to be at the cutting edge of Technical Analysis and is well regarded for his Ichimoku Analysis, along with building trading systems and Risk Reduction in trading applications. For more information about his services or his company, visit http://2ndskiesforex.com

For the first time since mid August of this year, the EURGBP is showing a possible pullback as its batman like bulletproof armor bull-run may have taken too many straight shots in the chest to keep plugging away.  Keep in mind this is only the third time this pair has climbed 800+pips in sub 60days over the last 3 years.

This pair has really benefited not so much from EURO strength, but moreso the Pounds masochistic desire to be sold into oblivion.  The plague probably had more friends back in the day then the GBP currently does in its native country.  The most likely scenario has been a Quinella of GBP weakness and seriously interested EURGBP longs.

However this trend current upmove cannot go ad infinitum, very much like Michael Jordon could not play basketball forever (something this trader is somewhat sad about).  Be that as it may, finding good pullbacks has been like a first time chopstick user trying to get the last few grains of rice in the sushi bowl (forgive the sushi reference, my dinner arrived while I started writing this article) - tis not an easy thing to do.

Looking at the chart below, the last pause (last three red candles on chart below) was a pretty recognizable pullback-continuation scenario as the follow up blue candle obliterated the last three amigos and handsomely breezing past the 61.8% fib of the 9500 - 8400 downmove.  However this last daily candle is most intriguing as the wick and failure to the topside is as large as the entire previous pullback.  Buying anywhere in between the close of that candle and the top would be a highly risky move, so it begs the question of buy on break or wait for a dip?  Although trading breaks has worked out quite well in this current trend, the previous ones looked more like a 3rd-and-1 while the current one looks like a 4th-and-4 (not as inspiring).

Thus, this trader would be in favor of punting and waiting for a pullback toward the previous 61.8%fib which proved a moderate resistance before holding for 3 days.  Alternative plays would be 9000 (where the last pullback held) or to a 20EMA touch (has not been broken since mid-august).

Some clues as to whether these will hold could come from the GBPUSD and if it can actually muster some upside going unnoticed by the EURUSD having a picnic at the local plaza.  However, the manner in which the EURGBP sells off (if it does) would be the best clues.  A violent sell off or any brutality shown towards the current medium/long term bulls today or tomorrow could be an indication the first defenses may not hold, thus requiring the 20ema or Kijun to come into play.  A close below all three of the lines would suggest the party is over for now and to wait till the 8830 level before re-building longs.  Either way, the test for the current bulls should be made clear in the next two days but medium to long term, we favor being long EUR over GBP for an eventual test of 9500.  The only thing which would negate this view for us would be weekly close below the 8700-8650 support zone.  One alternate scenario which would negate the bullish view would be a daily close below the Kumo.  Until then,  we feel any playful dips are really the bulls working on a fresh coat of paint for the coming winter and anyone putting on heavy shorts would be suspect of gargling with hydrochloric acid.

Chris Capre is the current Fund Manager for White Knight Investments (http://whiteknightfxi.com/). He specializes in the technical aspects of trading particularly using Ichimoku, Momentum, Bollinger Band, Pivot and Price Action models to trade the markets. He is considered to be at the cutting edge of Technical Analysis and is well regarded for his Ichimoku Analysis, along with building trading systems and Risk Reduction in trading applications. For more information about his services or his company, visit http://2ndskiesforex.com

The EURGBP bulls have attacked with a force similar to Alexander the Great or Genghis Khan and his famous Mongol Horse charges one is wondering if prisoners are being taken or simply scorched in the process.  Granted, the prospects for a stronger EUR against the GBP seems likely for a while, but technically the pair has just crossed a Rubicon of a barrier in .9075 one has to wonder what the next target is?

Consider this, the pair has climbed roughly 730pips in < 2mos.  This aberrant behavior has annihilated almost any form of resistance along the way with dips having a yogurt-like shelf life experiencing nothing more than 3 down days in a row and nothing more than an 80 pip dip.  This communicates buyers are coming in fast and looking for any cheaper price to get into this impressive move.

Taking a look at the chart below, we can see how once the pair cleared the gravity of the Ichimoku Cloud on the daily chart, its has not one single breach below the 20ema and used it as a Apollo like launching pad to mount its next upside attack.  Furthermore, the pair only had a brief pit-stop at the 38.2% fib of the 9500-8400downmove and didn’t even bother to stop and take pictures at the 50% fib.  The 61.8% appeared interesting from a brief sight-seeing perspective but proved nothing more than a small tourist stop on the way.

Eventual destination?  We suspect there really is nothing left for the pair to mount a significant challenge except the full retracement of the move back at 9500.  Its tidy, neat and makes sense (something the markets do not do often) but with the overall EUR prospects faring better than the GBP, along with its merciless price-action ascent and Carl Lewis long jumping performance past resistance levels, we suspect the 95pence level will be under attack within the next week or two and we will continue to add on positions as long as 8830 (former major top) holds.

Chris Capre is the current Fund Manager for White Knight Investments. He specializes in the technical aspects of trading, particularly using Ichimoku, Momentum, Bollinger Band, Pivot and Price Action models to trade the markets. He is considered to be at the cutting edge of Technical Analysis and is well regarded for his Ichimoku Analysis, along with building trading systems and Risk Reduction in trading applications.