Super-Low Spreads | ForexGen

In last week's update, I highlighted key levels to watch in EUR/USD, GBP/USD and AUD/USD for signs that further declines were unfolding. In each pair, those key levels were broken and the targeted declines were met or exceeded. Below are snapshots of those same currency pairs with new levels to watch.

* EUR/USD: Broke below the key 1.4500/50 level and losses exceeded my projected target of 1.4300. Importantly, EUR/USD is closing below weekly trendline support at 1.4470/80, marking that area as the new 'sell on rally' level. The 100-week moving average at 1.4192 looks to have contained the downside for the time being and a break below that level will likely trigger further weakness to the 1.4000/50 zone of round-number, psychological support. Below sees even longer-term weekly trendline support at 1.3850/70. Additionally, EUR/USD is closing below 1.4358, which is the 38.2% retracement of the move higher from Nov. 2005 lows at 1.1640 to the recent all-time highs at 1.6038. The close below the 38.2% level ultimately targets a drop to the 61.8% retracement at 1.3319, but the 50% level (1.3838) happens to coincide with weekly trendline support at 1.3850/70, so that level may prove more significant as support.

* GBP/USD: Collapsed below the supports I highlighted last week and reached the measured move objective from the 'head and shoulders' pattern at 1.7530 (Friday's low was 1.7538). Cable is below any moving average or retracement you would care to think of. The next downside objective is simply a zone of support between 1.7200/80. This area is marked by trendline support off lows from late 2005/early 2006 and a symmetrical decline equivalent to the drop from 1.9750 to 1.8520, which would target 1.7280. The 1.7850/7900 area is key trendline resistance that offers potential selling levels.

* AUD/USD: Succumbed below 0.8500 and exceeded my projections to 0.8280 and nearly reached the next target at 0.8000 (Friday's low was about 0.8030). Perhaps significantly, AUD/USD is closing above the 200-week moving average at 0.8090. Also, Fibonacci support comes in at 0.8103 (61.8% retracement of the rise from March 2006 low of 0.7016 to the recent all-time high at 0.9861), making this area the trigger to a likely decline below 0.8000. Weakness below these levels likely signals further declines to the spike low of August 2007 around 0.7680 next. Key trendline resistance in the 0.8300/30 area offers potential selling opportunities

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