Monday March 21, 2005 - 10:00:05 GMT
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European Session, 21/3/2005
Good morning everyone from FXstreet.com. The Crude oil closed around $57.05 yesterday, closing higher but almost running out of steam, indicators show. In the US stock markets, the Dow Jones Industrial Average closed around 10.630, almost unchanged with respect to previous day’s closing level, confirming the bearish tone for the recent sessions.
Forex Technicals at a glance
Euro/Usd: At the time of this writing, the pair is trading around the 1.3205 level. Pair has definitely abandoned the bullish momentum. It has clearly broken the uptrend line, and 2 of the 3 fibonacci fan lines that could be also drawn for the current upmove. It is now testing the first fibonacci retracement level (38.2%) around 1.32. Should that level be unable to hold (which, by the way, is important to determine the strength of the prevailing move) then the crucial support area is around the 1.31-1.3150, which marks the confluence of the 50-day simple moving average (the 20-day has been broken to the downside), the last fan line, and the 50% retracement of the current upleg. Obviously, a sustained break below that level followed by a break of the 1.30 level marks a trend change and proves the downtrend that we can draw using the highs of december, 29, 2004 and march, 10, 2005 a very strong one. Longs, though not supported by any indicator, therefore not advised, may come in around the fibo level.
Moving averages overview: EUR has its 200-day moving average today at 1.2745. We have the confirmation of a bullish cross by the moving averages, and pair is only trading above the 50-day now.
Indicators watch: Indicators watch-level 1 (signal generator): EUR Negative – no signal (flat). Indicators watch-level 2: EUR Neutral.
Gbp/Usd: At the time of this writing, the pair is trading around the 1.9060 level. It has finally broken the 20-day simple moving average to the downside, and has its next big support around 1.8965, where we find the 50-day moving average. The rounded-top formation it is creating for several sessions now does not look good for the pair, and can lead to further weakness if the pair doesn’t break it on the upside soon. It is trading slightly above the first fibo retracement level of the current level, but given the nature of the technical formation, the validity of the lines may not be as strong as in a more trending picture. First signal of regaining momentum is on a clear break of the 1.92 area.
Moving averages overview: GBP has its 200-day moving average today at 1.8572. pair is only trading above the 50-day moving average now.
Indicators watch: Indicators watch-level 1 (signal generator) : GBP Negative – no signal (flat). Indicators watch-level 2: GBP Neutral-Negative.
Usd/Chf: At the time of this writing, the pair is trading around the 1.1735 level. Well, the USD/CHF has confirmed all indications of being a USD-move leading indicator. After watching that USD/CAD wasn’t going to be the leading pair for the next USD move, I switched to the swiss franc to see what it was indicating. It pictured a very clear trend, with very clear breaking levels, which have worked to perfection, and have given the early warnings that something was being cooked (with respect to the next USD move). Breaking the downtrend was a more than clear warning sign for those USD bearish pleayers, and it has been confirmed today, when also the 20-day simple moving average has been broken on the upside. However, neither the 50-day moving average nor any of the fibonacci retracement levels have been broken, nor the moving averages have crossed on the upside, so extreme caution when calling this a new upleg for the USD. Joining the lows of december,30, 2004 and march, 13, 2005, we can determine the support of the “possible” uptredn, should all the indicators confirm the view.
Moving averages overview: USD has its 200-day moving average today at 1.2081. pair is above the 20-day moving average now.
Indicators watch: Indicators watch-level 1 (signal generator): USD Positive - no signal – (flat). Indicators watch-level 2: USD Positive.
Eur/Gbp: At the time of this writing, the pair is trading around the 0.6935 level. Pair has gone to test the 61.8% fibonacci retracement level of the current upleg, and it has nicely rebounded forming a “dragon fly” candlestick formation at the moment. Though moving averages are almost in a bullish cross, the indicators watch level 1 closes the long position today, so a mixed picture for the pair at the moment. If it confirms the bullish cross of the moving averages we may see some strength in the coming sessions, though they won’t be supported, at least initially, by indicators.
Moving averages overview: pair has its 200-day moving average at 0.6859 today. Pair is above both moving averages and looks poised for a more tahn possible cross on the upside in the next 2-3 sessions.
Indicators watch: Indicators watch-level 1 (signal generator): EUR Neutral –closing the long signal today-. Indicators Wacth-level 2 : EUR Neutral-Negative.
Indicators watch-Level 1: Trend indicators Direction, providing some useful investment information.
Indicators watch-Level 2: Momentum Indicators Direction (working in pairs), providing current market sentiment for the instrument.
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