The USD and the JPY were the strong performers this week. The
Greenback is breaking out of its recent consolidation mode. Risk
aversion kept the Japanese Yen strong as the preferred safe haven
currency. Commodity currencies are subdued, coming off December
strength as gold made record highs. The risk aversion also pressured
pairs such as the Loonie(CAD) and Aussie(AUD).
4H: Great call this week on FXTimes, as the market
rallied almost exactly to the 91.80 area completion a bearish Gartley.
Attention was to be placed on manner of decline, and it was very
aggressive. However, the market is consolidating today (Fri.) The
stochastic is in oversold zone, so there may be some rally from this 90
Daily: The stochastic is also oversold in the
daily time-frame. The pattern however suggests continuation. Therefore,
a swing can be projected to 88.50 as momentum is still aggressively
If the market does reach 88.50 and bottoms here, it is a completed
bullish Gartley. Then we will truly test whether the market is ready to
be bullish in the intermediate and long term.
There can be at least an expected short-term rally from 88.50 to test the 92.0 level coincident with declining trendline.
USD/CAD: Reversal Signal Eyes 1.11
Weekly: This weekâ€™s price action from the USD/CAD
is very bullish and indicates reversal. The weekly, price action
completed a reversal combination, as the stochastic crosses up from
oversold area. The 1.11 area is the 50% retracement zone and would be
coincident to the 50-WK MA.
Daily: The daily time-frame shows how aggressive
this weekâ€™s action was, but hints at resistance around the 1.063-1.064
area (78.6% retracement). the strength of the current rally suggests
this resistance might not hold, even though it may do so in the
If the market is able to move above, the 1.07/1.0750 area is the next resistance.
If the market breaks above 1.0850/1.09, it has completed a double bottom, and suggests further rally to 1.11.
EUR/GBP Chance for Pullback
Daily and 4H: The market has invalidated the
bullish outlook. Adjusting the outlook by assessing weekly and monthly
time-frames, we can establish bearish outlook towards 0.80 for the
intermediate term (1/2 yr), but in the long-term, the market is still
bullish, but may not start to be so until 2011. (Refer to EUR/GBP Revisiting the Big Picture).
Both the Daily and 4H time-frames are showing possible short-term
rally from the 0.8650 level. If the market is successful at keeping the
rally below the 0.8850 powerline, turning that into resistance, our
bearish outlook to 0.80 strengthens.
GBP/JPY: Eyeing Channel Support at 139.50
Daily and 4H: The outlook for GBP/JPY had been a
rally to test the 153.00. But after a couple of choppy weeks, the
anticipation for the bearish scenario grew. (Refer to Daily Technical Update 1.20.2010 GBP/JPY).
This week, on Thursday, the market broke below the congestion
pattern mentioned in a previous post. The decline was very aggressive,
and was followed by a pullback that confirmed the bearish break.
Then the lower support at 145.80 also broke, further strengthening
the bearish outlook, which is an intermediate decline to the 140.50
Fan Yang Currency Analyst Commodity Trading Advisor
Information and opinions contained in this report are for
educational purposes only and do not constitute an investment advice.
While the information contained herein was obtained from sources
believed to be reliable, author does not guarantee its accuracy or
completeness. CMS will not accept liability for any loss of profit or
damage which may arise directly, indirectly or consequently from use of
or reliance on the trading set-ups or any accompanying chart analyses.
Foreign currency trading is not conducted on an exchange. CMS is
acting as a counterparty to its clientsâ€™ transactions and as a result,
CMSâ€™ interests may be in conflict with its clients. Since CMS acts as
the buyer or seller in the transaction one should carefully evaluate
any trade recommendation provided by CMS or any of its solicitors.
Foreign currency trading involves a substantial risk of loss and may
not be suitable for all investors.
All screenshots are made from VT Trader 2.0 and are of actual market data at the time of the screenshot.
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