Friday March 26, 2010 - 19:11:25 GMT
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FXTimes: Weekly Technical Update 3.26.2010
Greenback Firms As Japanese Yen Weakens
This week, the greenback strengthened broadly. There was general
risk aversion in the markets. The Japanese yen, which usually gains
during risk averse periods broke that correlation this weak and its own
deflationary concerns pared its recent gains.
EUR/USD Targets 1.3050
- Daily and 4H: The EUR/USD declined as anticipated in last weekâ€™s post. The market declined consistently this week until Friday. The intermediate target remains at 1.30/1.31 or 1.3050.
- In the short-term, there is a correction, signaled by the current price action and the bullish divergence.
- Since the EUR/USD has a strong trending component, I would expect a short correction towards 1.3450/1.3470 (38.2% retracement).
- Look for topping action coming out of next weekâ€™s early action, then we may have another swing down towards 1.3050.
GBP/USD Targets 1.44
- Daily and 4H: The sterling has similar dynamic as the Euro against the greenback. Its intermediate term target is 1.44.
- In the short-term however, there is a correction suggested by the bullish divergence with basing action above 1.48.
- The 1.50/1.5050 area is the 38.2% retracement, and we may see some
topping action next week. If the market breaks above that level, we may
have further sideways action, and a break below 1.48 will be needed to
confirm the bearish outlook to 1.44.
USD/JPY May head to 100.50
- Weekly: The USD/JPY reflects the strength of the
greenback and the weakness of the Japanese yen. This week, it broke a
long-term declining trendline. A possible target in the
long-intermediate time horizon is the 38.2% retracement at 100.50. This
is also the 2009-high for the pair.
- Daily and 4H: The short-term target in the daily
time-frame is the 93.60 area (138.2% extended retracement and previous
top). But the 4H time-frame is showing some resistance at the 92.90
- There is a bearish divergence with the stochastic. If the market
declines, a short-term target would be the 90.50 area. We could still
expect some resistance near the previous top at 93.60.
- Since the market has been in a long-term bearish mode, our bullish
outlook requries some more confirmation. For example, looking at the
weekly chart, after a break above that previous high, a break above
94.00 (neckline) and another throwback should be enough confirmation
for the outlook towards 100.50.
USD/CAD To Test 38.2% Retracement
- Daily and 4H: The 1.00 target still remains, but
the market exhibited broad-based strength and that was reflected in the
USD/CAD as well. The dynamic against the Canadian dollar is a lot
different than against the EUR, GBP, and the JPY as shown in the above
- Judging from the 4H time-frame the rally has been choppy and labrious.
- The stochastic in the daily is no longer in oversold levels.
- To start the week, I would anticipate some topping action near the
1.0370 area (38.2% retracement, 200MA in 4H chart, and previous
- An bearish attempt after that suggests a downswing towards 1.00.
EUR/GBP: Anticipating one More Short-term Bull Swing
- Daily and 4H: The EUR/GBP broke below a double top formation last week, but it could also be an expanded flat, which has bullish implications.
- The daily shows a short-term bullish target at 0.9200.
- The 4H time-frame shows that the timing is not there yet. As
anticipated from last weekâ€™s post, the market was supported above 0.89,
and a pullback topped at 0.9050.
- The market retested 0.8900, which held, and is now in another bullish attempt.
- The market may now be in its bullish leg towards 0.9200. A break above 0.9050 would confirm.
- In the near-term, there appears to be some topping action.
- If the market breaks below 0.8900, the bullish outlook is invalidated.
AUD/USD: Reversal Signal
- Daily and 4H: The AUD/USD pair is also reflecting
recent greenback strength. In the daily, we see some bearish outlook
projections, first one being above the 78.6% retracement level, in
confluence with the 200SMA. This should be near 0.8800.
- The 4H time-frame shows the bearish move this week breaking an important rising support as well as a flat support at 0.9060.
- Look for a bounce at 0.90. If a rally from there is held under 0.9090/0.91, then the bearish outlook may be in place.
- Essentially, looking at the stochastic, we see that the momentum is
in a bearish cycle. We want to see a bullish cycle, and assess whether
it confirms a strong bullish move, or just a correction, which would
suggest bearish continuation towards 0.8800.
GBP/JPY: Pullback Should be Complete
- Daily and 4H: The GBP/JPY pair showed us a bearish
signal last week by breaking below its short-term rising support. This
suggested the completion of a correction, and thus a continuatin of
the previous downswing.
- This week, the market pared most of the downswing from second half of last week.
- The bearish outlook towarsd 128.20/128.00 however still stands, BUT is tested at the moment.
- The 4H time-frame shows the market testing the 138.00 area,
coincident with a 200-SMA. There is topping action and the stochastic
is in the overbought area.
- If the market can break below the short-term rising trendline and
close below 137.00, it is a bearish signal. This would confirm that
this weekâ€™s rally was simply a pullback, and improve the probability of
the decline towards 128.00.
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
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interests may be in conflict with its clients. Since CMS acts as the
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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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