Friday February 19, 2010 - 19:31:13 GMT
Share This Story
FXTimes - www.fxtimes.com
FXTimes: Weekly Technical Update 2.19.2010
Fed Outlook Adds to Greenback Strength
Last week, Eurozoneâ€™s debt issues and announcement of tightening in
Chinese banks extended the current atmosphere of risk aversion, which
weakened the Euro, but boosted the US Dollar and Yen. This week, the
Yen and Greenback consolidated, but the Greenback broke out and
continued its strength. The USD was boosted after the Fed raised
discount rates from 50 to 75 bps, a possible implication of nearing
loosening monetary policy overall. Letâ€™s take a look at what this week
shapes up for the coming weeks.
EUR/USD: Fed Raises Discount Rate
- 4H and Daily: Last week, the headline for the
GBP/USD was the continuation scenario, which after some further
consolidation materialized. The clear-out on the upside suggests
weakness of bulls, and confirms strength of bears for this pair.
- The daily chart shows the stochastic reflective of strong bearish
continuation. While the market is at a near-term support above 1.53,
the next level of support is 1.50 (61.8% retracement).
- If this is broken, the market will likely reach a full pattern
breakout (of the entire 2009 range) to the 78.6% retracement, 1.43 area.
- In the short-term, look for the pair to have a bit of correction
next week. Allow the market to rally and bring the momentum up from
oversold. Then if topping action occurs before any major bullish move,
the probability heightens towards 1.50.
USD/JPY: Is Retracement Done â€“ YES
- 4H and Daily: The question posed last week,
whether the recent retracement decline is over, is YES. The stochastic
in the 4H has turned from ranging into bullish mode. The point about
the ranging mode changing to bullish mode might be better demonstrated
if you look a little further back in the stochastic, which has ranged
from ob to os. The latest rally showed bullish dominance.
- I have been stalking this pair for a while now, and the daily chart
shows pretty much what I expected. The stochastic is supported in the
bullish zone, and price action is very strong in the daily.
- The obvious short-term bullish mode might carry over to the
intermediate/long-term, if the market can rally across the upcoming
trendlines, then the necline of the reverse head-and-shoulder.
- A swing projection of the previous rally is to the 98.00 area, but if this is wave III, further rally can be expected.
USD/CAD: Failed Double Bottom
- Daily and 4H: The USD/CAD looked like it was ready
to reverse. The stochastic was going to stay bullish with a crossover,
while prices held at 61.8% retracement.
- Friday session bearish candle is indicative a bearish momentum
returning and might push the pair to the 1.0340 area by next week.
- 4H: The stochastic was showing promising bullish
takeover, IF the stochastic was able to hit the overbought zone. But
price action reversed after rallying to 1.0530 and a strong bearish
candle brought the pair back to its short-term support zone.
- The market may still be bullish, if this zone holds, or even if the market goes to the 1.0350 area.
- We should see next week, if the current bout of expanding
consolidation will narrow. Then a breakout may better indicate the
direction to follow after the current retracement decline.
- Further decline would face support at 1.02 area. A rally, indicates
possible Wave III., and a swing projection of at least 100% the
EUR/GBP Still in Consolidation, Testing Long-term Support
- Daily: After a bearish retracement pattern last
week, the market indeed declined. However, it was not even close a
swing projection and did not even reach the previous low. Candlestick
combination would have warned you against the bearish outlook.
- The current short-term rally might bring the pair back up to the
0.8850/0.89 area, and complete a bearish gartley. IF the market can top
and reverse to break below 0.8650 (where upsloping trendline would be),
then the market can continue declining, and it would be an intermediate
to long term decline.
- Weekly: The weekly picture shows that the market
has been in a long-term consolidation since 2009. You can see a
possible triangle developing. That is, is the market is support at the
current short-term consolidation pattern.
- However further decline eyes the 0.84 area in intermediate term
- Teh bullish outlook, in the short-term would be triggered if the
market climbs above 0.89. The short-term target for that rally would be
the downsloping resistance (not drawn here), which would be in the
GBP/JPY: Stalking Retracement Pattern
AUD/USD â€“ Stalking Bullish Swing
- Daily and 4H: The AUD/USD continues to be strong within the context of a consolidation range seen in the Daily.
- The 4H time-frame shows the detail of the current upswing, and a
possible Elliott wave count that is finishing c wave of Wave IV
correction. If so, there is another terminal wave.
- Looking at the daily, if wave V is 61.8% of wave IV, it would be
coincident with the 78.6% retracement and near the test of the
- This projection 0.915-0.92 continues to be valid.
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.
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."