Saturday October 16, 2010 - 02:33:05 GMT
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Forex Hound - www.forexhound.com
EUR USD Fails to Close above 1.40; Forms Reversal Top
The EUR USD closed below 1.40 for the week, taking the air
out of some analyst forecasts for a move to 1.45. The outside move closing
price reversal top could also be indicative of the start of a substantial
correction. It all depends if there is follow-through selling next week and if
the market can hold the last swing bottom on the daily chart at 1.3775.
This weekâ€™s rally through the last swing top at 1.4028 to
Fridayâ€™s high at 1.4159 appeared labored. At times it seemed traders were
tentative about going long at such a lofty level. In addition, much of the move
seemed driven by a comment from the ECBâ€™s Axel Weber calling for an end to the
central bankâ€™s asset buyback program rather than sound economic reasons.
Although the weakness started early in the U.S. session,
Federal Reserve Chairman Ben Bernanke didnâ€™t help matters much when he failed
to clarify the Fedâ€™s quantitative easing plan.
Bernanke gave a speech on Friday which failed to give traders
the clarity they needed to continue to pressure the Dollar. Some feel that
Bernanke may be lacking the consensus he needs to implement the QE program that
he feels is necessary to revive the economy.
Technically a break through the last swing bottom at 1.3775
will turn the main trend down on the daily chart. The main trend indicator
turned long on September 1. Besides turning the main trend to down, a break
through this level may be setting up for a 50% correction of the 1.2587 to
1.4159 range to 1.3373.
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