Friday April 9, 2010 - 18:23:20 GMT
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FXTimes - www.fxtimes.com
FXTimes: Daily Weekly Technical Update 4.9.2010
Commodity Currencies Stay Ahead of the Pack
The Euro continues to be pressured, but the greenback is giving back
some of its recent strength as well. On the other hand the Japanese
currency stalled its slide, though there has not been any significant
show of strength. These developments may thus be corrective so letâ€™s
continue to stalk them for a return of dollar strength, and/or Japanese
yen weakness. Meanwhile, commodity currencies such as the AUD and the
CAD continue to firm up along with gold and oil.
EUR/USD: 1.3050 Target Shelved as Market Consolidates
- Daily and 4H: The EUR/USD has been projected to
slide to the1.3050 area. The week began in the direction of this
outlook, but failed to break below the previous low at 1.3280.
- A rally is materializing as we can see in the 4H time-frame. The
daily time-frame shows a reversal combination to end the week as well.
- This all suggests some furthering of the near-term bullish attempt.
- Remember however that the market is in an established bearish mode, so stalk this current rally as a correction.
- The 4H chart shows a swing projection can bring the pair to 1.36.
The RSI in this scenario would reflect sideways instead of bearish
- The daily RSI still shows bearish momentum and may still do so after a rally to 1.36. (The range has been staying below 60).
- So stalk the current rally towards 1.36 and see if topping action
and a bearish attempt can follow. If so, look for the market to
essentially range between 1.36 and 1.33 with a bearish bias.
GBP/USD Penetrating the 1.5350 Channel Resistance
- Daily and 4H: The GBP/USD market was showing
topping action at the 1.53 level to end last week. This week, it
continued to â€śtop offâ€ť as seen in the 4H time-frame, but instead of
declining towards the 1.48 support, it broke above.
- The daily shows that this break of short-term consolidation is
still within the context of intermediate consolidation, with resistance
at 1.5350. A break above 1.54 will be needed to establish a bullish
outlook in the short/intermediate-term.
- Looking at the daily, we see that the market is in a bearish mode, so the current rally should be stalked as a correction.
- A Fibonacci cluster of 50% and 78.6% resides at the 1.56 level. A
break above 1.54 therefore suggests a rally in the short-term to 1.56.
A break above that would have significant implications in the
intermediate and long-term.
- The market can still top off again next week and return to the 1.48
area. It is best to wait for a decline and see if it is a throwback,
which suggests a rally to at least 1.56. But if it is strong, it may be
a continuation decline to test 1.48 and possibly even lower towards
USD/JPY Offers Choppy Throwback
- Daily and 4H: The USD/JPY pair was very bullish
last week, and suggested that it can at least meet a swing projection
at 96.0 area. This week however, the market was not ready to be
committed to the intermediate bullish scenario yet.
- The daily shows 3 strong bearish days after a string of bullish
days. This 3-day correction is a classic warning of continuation.
- We do see that the 2 candles after the 3 declines have decelerated.
We can also see in the 4H time-frame that the market has already a
completed 2-legged retracement. A third seems to be materializing.
- Next week, I would look for bottoming action near 92.50.
- The main thing I am looking for is a rally that can break above the
declining channel resistance seen in the 4H chart. That spells
continuation to 96.00.
USD/CAD: Parity Holds as Support
- Daily and 4H: The USD/CAD headed towards the
parity level last week. The question is whether is could break further
below. So far this week, it is holding as support.
- We see bullish divergence lined-up in both the daily and 4H time-frame.
- A bullish attempt did already materialize in the 4H time-frame, but it appears another attempt is at hand.
- This second attempt could project the previous swing to complete a Gartley near 1.0130.
- Or the market could have a triangle consolidation.
- In any case, these bullish signals should only be expected to reflect short-term corrections.
EUR/GBP: Stalking Bullish Attempt in Bearish Mode
- Daily and 4H: The EUR/GBP pair broke below the 0.8850 level this week and suggests a decline towards 0.8650.
- The daily time-frame shows strong bearish momentum that is not
oversold yet. Price action however shows rejection of bearish attempt
to break below an intermediate term rising support.
- The price action in the 4H time-frame is also signals a bullish reversal.
- However, as the Euro continues to be bearish, todayâ€™s strength
across the board should not be taken as indication of overall strength
but rather a correction.
- The 0.8850 area may be tested next week if the current euro
strength expands. However, I would look for topping action here, and a
bearish signal to continue the decline to 0.8650.
AUD/USD: Throwback Confirms Upside Breakout
- Daily and 4H: The AUD/USD pair as corrected anticipated broke to the upside and is closing in to test the 94.00 high from November of 2009.
- The daily chart shows the current rally nearing a swing projection that is coincident with the 94.00 resistance.
- The 4H time-frame shows this weekâ€™s congestion pattern. This triangle provided many lessons.
- 1. Patterns can develop into more complex patterns (bearish butterfly was only part of a larger ascending triangle.
- 2. The trend is your friend.
- 3. Wait for throwback/pullback. This is probably the main lesson
here. There was a lack of pullback to confirm the bearish breakout,
while there was a throwback in the bullish breakout to confirm that.
GBP/JPY: Continues Testing Resistance
- Daily and 4H: The GBP/JPY continues to test the declining resistance near 144.50.
- The 4H time-frame shows that there was already a completed Gartley
at 38.2% retracement area near 141.0. Also the bullish attempt
following that broke above the declining near-term resistance.
- However, the market is not able to break above 144.50. If it does
to start next week, and can sustain a low above 145.0, a major
intermediate and possibly long-term bullish outlook can be considered.
- The weekly chart below shows a full swing projection that nears
178. This is a long-term outlook, and is far from being confirmed.
- Instead if the break above 145.00 is sustained, look for
intermediate projections at the 61.8% retracement area near 151.20.
Then the 163.0 2009-high is the next intermediate term target.
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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