Forex Technical Analysis

EURUSD: 1.3218 Short-Term Trend: weak downtrend Outlook: A week ago I favored longs on a small pullback against the 1.2670 level. Depending on your risk tolerance, you are either long already or have missed to enter long by a small margin. I will consider that we have a hypothetical long position. The daily chart now looks quite positive. The prices are above the rising 21-day MA and that's bullish. Of coure, the daily trend is objectively still on the downside because the prices are below the 100-day MA. But based on the presented wave structure, an advance twd at least 1.3520/1.3720 is expected. On the downside, below 1.2870 negates, risks re-test on the Jan low. Strategy: Holding long from 1.2900 is favored. Stop below1.2870. Target=1.3700

A sharp fall from 81.80 area seen in the past few weeks is impulsive, which means that we have a temporary top in place, likely of a wave I, which was an expanding diagonal. That is type of a motive wave, where structure allows overlap between waves four and one. With this being said, at least three waves of a pull-back is now underway within wave two, which will ideally reach 50-61.8% retracement area and then reverse from.

EURUSD: 1.2957 Short-Term Trend: downtrend Outlook: Several weeks ago we favored a short position in the 1.34/1.35 area with a target at 1.2870. The 1.2870 target was reached in the last week of 2011, so we are now flat. The daily downtrend remains strong as so far there is no evidence of a major bottom. But we believe that a low will be found soon either near the 1.2870 level or near 1.2670 level. Then, a rally back twd 1.3520 will be expected but only to be followed by another decline. We captured a big move down, so from a trading perspective it is wise now to step aside for a week or two. Strategy: The previous shorts from 1.34/1.35 hit our target at 1.2870. I am now flat.

EURUSD: 1.3042 Short-Term Trend: downtrend Outlook: A few weeks ago I favored a short position in the 1.34/1.35 area. Since then EUR has been under heavy pressure and has already declined below 1.3000 level. As the daily chart remains quite negative with prices below the declining 21-day moving average, I expect to see fruther weakness twd 1.2870 and possibly to 1.2670 before this leg lower is over and a strong counter-trend move up develops. Having said that, holding short remains my favored strategy here. On the upside, a firm and sustained trading abv 1.3200 will suggest a temp. low has been found already.... Strategy: Holding short remains favored with a stop abv 1.3250

EURUSD: 1.3384 Short-Term Trend: downtrend Outlook: EUR was little changed last week as it traded in a tight range between roughly 1.33 and 1.3450. As the prices remain below the declining 21-day moving average, the main trend is considered strong downtrend and further losses are still expected. I am a bit disappointed by the fact that there was no follow through selling last week, but still, the main focus remains down. If a rally develops, it is expected to find resistance near 1.3520 level. A sustained move abv there will indicate more upside potential twd 1.3720 and 1.3900 before the next leg down takes place... Strategy: Holding short remains favored with a stop abv 1.3550.

Despite some action on the FX market in the past week, provided by the ECB rate decision and EU summitmost of the major pairs remained trapped in a range, sideways market. As such, we decided to take look on some FX crosses, such as Eur/Chf  and Eur/Aud for potential trade set-ups.  We will pay a very close action to Eur/Chf, which is forming a very nice clean triangle pattern from where we expect a bullish breakout in the coming week. We know that SNB will do everything possible to prevent any gains of the Swiss franc, and if we aso consider the euro zone's latest plan to solve its debt crisis, then this should be supportive for the Eur/Chf! Click on the video below for a technical analysis, which also includes Eur/Usd and S&P500.   <br />

Pound is one of the weakest today, down almost 300 pips from Friday highs, currently trades around 1.5600. We anticipated that move, on some basics of technical analysis "how broken support becomes resistance". Here is the chart and comments that we shared with our subscribers on Thursday, Nov 17th 2011 past week Cable broke through the 1.5860/90 support region which could be start of something bigger to the downside, especially if we consider that prices slipped below the support line of a trading channel as well. But notice that even if we still count move from the top in a corrective way, such as double zig-zag, we still need one leg lower (wave (C)) after wave (B) bounce, which may occur in the coming session or two. Alternate count also signals for weakness after corrective retrace into 1.5860/90 area which will now tend to react as a resistance either in wave (2) or (B) wave! "Support becomes resistance; Resistance becomes support". Bottom...

GBPUSD: 1.5802 Short-Term Trend: downtrend Outlook: The break below 1.5870 last week confirms the wave B from the early Oct low is over and if the presented wave count is correct, weakness twd 1.5000 lies ahead. Thus, I am bearish now as long as the prices stay below 1.6000 and 1.6100. A decline below 1.5680 will further solidify that bearish view. The daily oscillators more or less confirm the bearish outlook as well. So, with all this in mind, I favor shorts here as the downside potential is quite large at this point. I encourage you to wath my video analysis on all major markets (forex and stocks) that I recorded for you on Sunday.

EURUSD: The pair has reversed its Friday gains and now eyes a return to the 1.3482 level, its Nov 10’2011 low. Below here will annul its two-day recovery and resume its short term weakness towards its Oct 10’2011 low at 1.3377. Further down, the 1.3144 level, its Oct’2011 low comes in as the next target where a break will aim at its bigger support standing at the 1.3000 level, its psycho level. Its daily RSI is bearish and pointing lower suggesting further weakness. Alternatively, the pair will have to break and hold above the 1.4241 level, its Oct 27’2011 high to end its present bear threats and bring further gains towards the 1.4342 level, its daily falling trendline. Further out, resistance resides at the 1.4550 level, representing its Aug 29’2011 high. All in all, with EUR bearish and holding below the 1.3604 level, bear pressure continues to dominate with risk towards the 1.3482 level.

GBPUSD: Despite its lower close the past week, GBP looks to continue its upside offensive following a reversal of its earlier losses during Monday trading session. This development now leaves its key resistance standing at 1.6161 level, its Oct 31’2011 high as the next upside target. A decisive violation of here will resume its short term uptrend towards the 1.6204 level, its Sept 06’2011 and subsequently its Aug 30’2011 high at 1.6418. Its daily RSI is bearish and pointing higher supporting this view. Alternatively, support lies at the 1.5874 level, its Nov 03’2011 low with a breach of there targeting the 1.5713/1.5687 levels. Below here will turn attention to its Oct 12’2011 low at 1.5541. On the whole, the pair continues to maintain its short term uptrend tone as it looks to recapture the 1.6161 level.