Poslano Nedelja, 26th April 2009 od admin
Euro Rebounds Along with Better Fundamentals
The Euro pared its losses from last week. The market had been
pressuring the Euro-zone currency partly due to uncertainty in
the ECB regarding their next move. Stock markets had a rough
start, but stabilized and rebounded to end the week. This was
the main driver to many crosses which are in choppy trending
channels. The Euro’s rally was also boosted by its better-than
-expected fundamentals throughout the week, mainly of
manufacturing and industrial data.
EUR/USD Reverses
The EUR/USD had a very beautiful swing this week. In the 2H
chart, you can see that the pair started the week falling
sharply to the 1.2900 area. However this proved to be strong
support, coinciding with the 61.8% retracement of the early
March rally. We witnessed 2 days of consolidation establishing 1
.2900 as support, and 1.2980-1.2990 as resistance. This gave us a
good anticipation for a breakout, which came on the Wednesday
-Thursday rally. This rally was held back slightly by a wedge
consolidation before the market could decidedly push for a sharp
rally. We saw minor upsloping resistances broken, and now the
pair is at 1.3300 where it nears the intermediate-consolidation
channel resistance. Price action on Friday showed some possible
profit taking, which should not be mistaken as a hint of
reversal, although it does to a slight degree. The bias from a
rally decelerationon Friday is not as strong as one that would
come on the weekdays. Therefore, Monday’s price action deserves
closer attention. The first plan can be anticipation of reversal
, looking for the short-term uptrending support break and
candlestick combination as trigger (You may want to look at a
lower time frame such as 1H). You may also help time this with a
oscillator. However, being that there is a completion of abc
pattern (some call it abcd - based on where you start your a),
should warn of possible upside as well, so this reversal may be
very temporal. Again, it is very important to look at the market
action at junctures where different factors seem to be
conflicting. These two opposing forces may be reflected by some
time of consolidation before a more decisive swing or
continuation.
USD/CAD Looking Bearish
Last week, we looked at the USD/CAD in and saw that there may be
a test of a upsloping powerline, which may have switched
polarity from support to resistance. This test coincided with a
test of a downsloping resistance. The result this week was a
decline after the Monday rally and two days of consolidation.
This decline may see some more momentum next week to the 1.1800
area before seeing major support. The stochastic is in oversold,
and looks to be reversing so in the short-term, there may be
another rally before further decline to our target.
GBP/JPY Nears Channel Support
Technical Setup:
Continuing our analysis on GBP/JPY, we see that the rounded
bottom setup has yet to see follow-through in price action.
Instead, there is a restest of old neckline. Despite the
difficulty, the pair is still in an intermediate uptrend though
choppy and weak. Looking at drawn channel lines starting with
the second shoulder, we see the price action very contained and
reaching the upsloping support. An accelerated channel would
have seen support touched, but a more slightly longer-term
support has not been touched yet. The stochastic in 4H chart,
shows a bullish divergence, and there may be a completion of an
abcd consolidation. Look for a breakout of this consolidation
channel on the upside to bring a rally back towards channel
resistance.
Will EUR/GBP Rally Sustain?
Technical Setup:
The EUR/GBP has a similar overall price action as the EUR/USD in
that it is reversing a decline. The rally at the moment seems
like it will meet resistance at the 0.9150 - 0.9200 area. Only a
break of this area should we consider the possibility of a rally
back to 0.9500. With the stochastic poking at the overbought
area, we may see a downswing before that happens. The
alternative is that the current rally is simply a short-term
swing that will meet resistance at the 0.9150-0.9200 area and
reverse after completing a abc or abcde. Keeping that in mind,
we are also going to monitor the upsloping support, anticipating
a coutertrend breakout.
