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Weekly Technical Strategist

EURUSD: Corrective Weakness Still Remains In Progress

Mon, Apr 20 2009, 06:36 GMT
by Mohammed Isah

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EURUSD: Corrective Weakness Still Remains In Progress - With EUR reversing its previous week gains and breaking back below the 1.3330 level, its Jan 27’09 high/former range top into its broader consolidation range(between 1.3330 & 1.2330 levels)again, risk has increased for further declines towards its key support at the 1.3113 level, its Mar 30’09 low.

GBPUSD: Still Limited Within Its Daily Rising Channel - Although failure at 1.5066 high pushed GBP to the downside on Thursday and Friday, it still posted a higher close at 1.4795, forming a shooting star candle.

EURUSD: With EUR reversing its previous week gains and breaking back below the 1.3330 level, its Jan 27’09 high/former range top into its broader consolidation range(between 1.3330 & 1.2330 levels)again, risk has increased for further declines towards its key support at the 1.3113 level, its Mar 30’09 low. We envisage a clearance of there driving the pair further lower towards the 1.3090/93 level, its Feb 09’09 high/April 09’09 low. We should see a cap at the latter level if traded due to its significance as strong support level which also habours its .50 Ret(1.2456-1.3738 rally) at 1.3097.However,if that level is cleanly violated, the 1.2992/1.3000 area, its Feb 23’09 high/psycho level will be targeted ahead of the 1.2456 level, its Mar 04’09 high.Weekly RSI remains bearish as well, pointing towards further weakness. To the topside, resistance initially lies at the 1.3330 level, its Jan 27’09 high/former range top with a cut through that level allowing the pair to push towards the 1.3583 level, its April 06’09 high and subsequently its Mar 19’09 high at 1.3738.This level serves as the trigger for the resumption of its short term uptrend initiated at the 1.2456 level towards the 1.3964 level, representing Jan 05’09 high with a breach of there creating scope for further upside towards its Dec 29’08 high at 1.4363.On the whole, with price action and momentum indicators pointing lower, EUR should target additional lower levels prices.

GBPUSD: Although failure at 1.5066 high pushed GBP to the downside on Thursday and Friday, it still posted a higher close at 1.4795, forming a shooting star candle. We maintain that while the pair continues to hold within its daily rising channel and above its key support at the 1.4662 level, its Feb 23’09 high, a return above its Jan 16’09/Feb 09’09 highs at 1.4981/86 is expected with the next upside target coming in at the 1.5066 level, its April 16’09 high and then the 1.5374 level, its Jan 08’09 high. The weekly stochastics is positive and advancing suggesting further strength. The risk to this analysis remains the highlighted shooting candle pattern. However, if the pair follows through on its shooting star candle formation and pushes below the mentioned rising channel then the 1.4662 level will be targeted with a break and close below there putting it in position to head towards the 1.4305 level, its Mar 06’09 high and later the 1.4111 level, its Mar 30’09 high. All in all, with its daily rising channel still valid and holding above the 1.4662 level, GBP continues to maintain its nearer term upside outlook.

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Published on  Mon, Apr 20 2009, 06:39 GMT

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