Friday February 18, 2005 - 17:02:39 GMT
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The Voice of FXstreet.com - Weekly Report (14-18/2)
WEEKLY PICTURE STILL GOOD FOR THE DOLLAR
I know that the title may sound a little bit contradictory with respect to the price action we had this week, but one must consider the current limited downmove only as the second point for a 1-2-3 upside pattern in the weekly charts.
That’s right. If you take a look to the weekly usd/chf chart provided below you will exactly see what I am talking about. 1-2-3 chart patterns are a very useful tool for determining either trend changes or good coounter-trend moves. In my opinion, and confirmed by what the indicators show, we are inf ront of one of those formations. However, we haven’t seen the point 3 of it yet, therefore we must follow it closely, because although it is highly probable we will have the formation competed inc oming weeks, we can’t take it for granted, and a break below 1.16-1.1550 would definitely negate this view.
Why do I take the usd/chf to talk about the USD in general terms? Because it has been acting as a leader currency since it bottomed around 1.13 few weeks ago. I consider its current 1-2-3 unfolding pattern a leading indicator of what the price action might look like in coming weeks.
In the chart below, you will see why I am, despite being positive overall, cautious about the 1-2-3 pattern and its completion. We did the first point (up) from 1.13 to 1.2250, and we’re doing the second one (down) from 1.2250 to …..? it shouldn’t be more than 1.16-1.1550 as I said before, to confirm the validity of the pattern, and to resume is completion with the point 3 (up), which target 1.27/1.30. The only thing to keep an eye on is that the secon point of the pattern just started right at the weekly long-term downtrend line from 2001. Therefore, we will be having the confluence of two big things if this pattern gets competed : first, the break of a big and long-term trend, and second, the confirmation of a very strong bullish formation.
So, what can you take out of all this? If you are a long-term investor, seriously consider the chance of profiting from this trading pattern, should it get confirmed. Best entry level would be on a weekly closing level above 1.2250/1.23. For those who can’t wait for points 2 and 3 to be completed, trying longs from current levels with very light trading size (increasing size if the pattern does get confirmed), closing all trading size if a break 1.16-1.1550 happens.
This week’s closing levels (at the time of this writing) : EUR/USD 1.3065 (+190), USD/CHF 1.1830 (-200), GBPUSD 1.8945 (+290), EUR/GBP 0.6895 (-5), USD/JPY 105.60 (flat), USD/CAD 1.2295 (-110), AUD/USD 0.7875 (+45), NZD/USD 0.7240 (+125), EUR/CHF 1.5455 (-85), EUR/JPY 138.25 (+225), GBP/CHF 2.2405 (-120), GBP/JPY 200.50 (+290). USD and JPY overall loosers, with JPY being the main looser for the week by some distance. CHF the main winner of the three major european currencies, and EUR the overall loser on them.
view the full report : http://www.fxstreet.com/nou/content/110440/content.asp?menu=market
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