Oil had another down day so the USD had another up day.   This was due to the comments from Paris Hilton on Energy and how the U.S. can benefit from a hybrid of policies from McCain and Obama.   That was a joke J .    Is this a double top, triple bottom, new downtrend, etc…?   Was 1.6 the top for the Euro?   This all doesn’t make sense.   There are so many financial institutions writing down more loses and the Fed is bailing everyone out with access to their window until January of 2009.   Could this be the big money pushing down price to create a better place to buy?   How long is the consolidation going to last?   OIL seems to be the leading indicator to everything right now.   That’s a lot of power for any one thing!   Now that Oil has fallen below 121 the next major support is 116, then 110, then 100.   116 = 50% retracement, 110 = 61.8% retracement, 100 = 76.4% retracement.   $110 might be the area where the bulls are looking for price to return to before making their next big move.   Now, the EUR/USD is back at a significant support zone.   As we stated yesterday, if price breaks below this area then we could see the movement retrace to the 1.49 area.   We’ll see how the correlation works out in the coming days and weeks.

The Sterling has brought out the bears for the last couple of weeks, for sure.   When we look at this chart we see lower highs and stronger bear moves than bull ones.   Critical zone for this pair is 1.94 with 1.9340 being an area to break for a sharp bear move where 1.9 could be the next zone.   As we enter this congestion zone it is important to note the past support and see where the next short term resistance could be.   The last support area, now resistance, looks to be at the 1.9650 zone.   At the moment the pair looks a little oversold and could find support here again moving forward.   A little FYI; July’s candle finished as a doji which usually signals a direction finder.

Yesterday we compared this pair to an old children’s book, “The Little Engine that could.”   Today…..it did!   Almost made it to 110 too!  This is an easy one to analyze today.   Support is the previous resistance of 108.56 and resistance looks to be the 50% retracement of 109.93.  110 is a psychological level though and 110.56 is a price of historical shifts.