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Weekly Technical Strategist

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GBPUSD: Backs Off Key Support, Looks To Recover Higher

Mon, Oct 5 2009, 07:02 GMT
by Mohammed Isah

FXTechstrategy

In This Issue:

EURUSD: Evening Star Candle Set To Trigger Further Correction - EUR put in a weekly lower close and printed an evening star candle formation(top reversal signal) to close at 1.4481 at the end .

GBPUSD: Backs Off Key Support, Looks To Recover Higher - The pair halted its declines initiated from the 1.7041 level the past week reversing higher after testing its key support located at the 1.5770 level.

EURUSD

EURUSD: Evening Star Candle Set To Trigger Further Correction

EURUSD - EUR put in a weekly lower close and printed an evening star candle formation(top reversal signal) to close at 1.4481 at the end of the week. Though still retaining its bullish medium term structure, the formation of this pattern on the back of its previous week failure at the 1.4844 level has now posed a threat of further downside with its MT rising trendlinecurrently at 1.4424/ the 1.4446 level, its Aug 09 high being aimed at. A combination of these two levels should provide support thereby turning the pair higher again. A setback below there if it materialize will turn focus to the 1.4176 level where its Sept 01’09 low is located. Its weekly RSI now turning lower is supportive of this view. However, on a build on its Friday recovery high, EUR should head towards the 1.4711 level, its Sept 28’09 high followed by its YTD high at 1.4844. Above the latter will resume the pair’s medium term uptrend and put it on the path to further upside gains towards the 1.4875 level, representing its Sept 21’09 high ahead of the its psycho level at 1.5000 and then the 1.5082 level, its Aug 10’08 high. Overall, retaining its bullish medium term outlook, EUR is faced with downside pressure having lost momentum at the 1.4844 level.

GBPUSD

GBPUSD: Backs Off Key Support, Looks To Recover Higher.

GBPUSD - The pair halted its declines initiated from the 1.7041 level the past week reversing higher after testing its key support located at the 1.5770 level. With that accomplished, a build up on that recovery is now expected the coming week with resistance standing at the 1.6225 level, its weekly 50 ema. Invalidating that level will open the door for more upside gains targeting the 1.6466 level, Sept 23’09 high and the back of its eroded MT trendline.
That zone should reverse roles as support and turn the pair back down allowing for further downside weakness.
However, if it is taken out GBP should focus on higher prices towards the 1.6740 level, its Sept 11’09 high. On the downside, reversing its present recovery will mean a return to the 1.5770 level with an eventual loss of there driving the pair further to the downside aiming at the 1.5287 level which marks its .50 Ret(1.3501-1.7041 rally).
It psycho level sited at the 1.5000 will be targeted on a break below the latter. On the whole, GBP though backing lower level prices remains vulnerable to the downside nearer term.

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Published on  Mon, Oct 5 2009, 07:47 GMT