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Weekly Technical Strategist

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EURUSD: Momentum Remains To The Upside

Mon, Oct 19 2009, 06:54 GMT
by Mohammed Isah

FXTechstrategy

In This Issue:

• EURUSD: Momentum Remains To The Upside

• GBPUSD: Recovery Higher Shifts Focus To The 1.6468 Level

• USDJPY: Corrective Seen Nearer Term

• EURJPY: Recovery Gains Further Momentum.

• AUDUSD: Still Targeting Higher Prices.

• USDCAD: Set To Recover Further Higher.

• EURGBP: Rolls Over, Targets Lower Prices.

  
  

EURUSD

EURUSD: Momentum Remains To The Upside

EURUSD - A second week of upside gains the past week saw the pair wiping out its corrective losses and breaking above the 1.4844 level to print a new high of 1.4968, its highest price since Sept 22’08. The challenge now is how EUR reacts as it approaches its big psycho level at 1.5000. We believe this should pose a threat at first(as evidenced by its Friday price failure at 1.4968) which could trigger another correction but if this view is voided and a loss of the 1.5000 level materializes, we could witness a run at the 1.5082 level, its Aug 10’08 high and then the 1.5283 level, its May 04’08 low. Its weekly RSI is bullish and trending higher suggesting further upside though ion overbought zone. Conversely, if its price failure at the 1.4968 level builds more downside strength the coming week, risk should shape up towards the 1.4843/42 level, its Sept 23’09 high/Oct 15’09 low. That level is expected to fence off the bears and turn the pair back up but if that it gives in, the pair could see further declines towards its Oct 12’09 low at 1.4672 with a violation of that level paving the way for further downside pressure towards the 1.4479 level, its Oct 02’09 low and next its MT rising trendlinecurrently at 1.4432. On the whole, EUR retains its broader medium term uptrend but faces the risk of a correction as its approaches its big psycho level at the 1.5000 level.

GBPUSD

GBPUSD: Recovery Higher Shifts Focus To The 1.6468 Level

GBPUSD - The pair recovered strongly higher from its short term low at 1.5708 the past week breaking through its Sept 30’09 high at 1.6124 and its daily major emasto close higher at 1.6356 on Friday. This is the pair’s strongest weekly close since Jun’09. With its declines started at the 1.7041 level (YTD high) halted, GBP now looks to head further higher targeting a confluence of resistance levels (its Sept 23’09 high/SH falling trendline))located at the 1.6468/66. That zone is significant and may turn off the pair on testing it as signs of price hesitation were seen ahead of that zone on Friday . However, if a violation of there occurs, scope for further upside gains towards the 1.6740 level, its Sept 11’09 high could be seen with an eventual loss of there setting the stage for a retarget of its YTD high at 1.7041. A break and hold above that level will be required to resume its medium term uptrend currently on hold. Its weekly RSI remains supportive of this view as it is bullish and pointing higher. On the other hand, on any pullback from its current price level, the 1.6124 level should reverse roles and provide support . Further down, its psycho level at 1.6000 comes in as next support ahead of its Oct 13’09 low at 1.5708 and then the 1.5500 level, its psycho level. On the whole, having rallied strongly the past week, risk remains to the upside but GBP must break and hold above key resistance zone at 1.6468/66 to clear the way for further recovery.

USDJPY

USDJPY: Corrective Seen Nearer Term

USDJPY - Recovery off the 88.82 level saw the pair closing higher the past week after breaking its resistance at the 90.44 level, its Sept 30’09 high. This is coming on the back of its previous week lower price rejection candle. The current price development now leaves the pair targeting its Sept 24’09 low at 92.52 with a loss of there opening up further upside towards the 93.30 level, its Sept 07’09 high.
The weekly RSI is bullish and pointing higher suggesting further strength. On the downside, initial support lies at the 90.44 level, its Oct 12’09 high which is now expected to reverse roles. Below there if seen will bring the 88.82 level, its Oct 14’09 high into focus with a break and close below that level targeting its Oct 07’09 low at 88.00. This level serves as the trigger for the resumption of USDJPY’s short term downtrend currently on hold. On the whole, having halted its SH declines, attention has turned to the upside for further corrective upmovenearer term.

EURJPY

EURJPY: Recovery Gains Further Momentum.

EURJPY - The cross closed higher for a second consecutive week since reversing off its Oct 02’09 low at 129.04. With momentum still pointing higher nearer term, further upside threats are seen towards the 136.07 level, its Aug 24’09 high and then its declining trendlinecurrently at 138.50.
Decisively invalidating that level will turn focus to the 139.26 level, its YTD high. Its weekly momentum indicators have turned higher supporting this view. On the upside, if price hasitationseen on Friday follows through lower this week, correction of its rise from the 129.04 low will be seen opening up further downside risk towards the 1.33.00 level with a cut through there creating scope for further declines towards the 132.01 level, its Sept 30’09 high and then the 130.61 level, its Sept 30’09 high followed by its Oct 02’09 low at 128.98 level. On the whole, though trapped within its symmetrical triangle, EURJPY faces upside risk nearer term.

AUDUSD

AUDUSD: Still Targeting Higher Prices.

AUDUSD - The pair remains on the offensive maintaining another leg of upside gains and testing an 11 month high of 0.9273 the past week. Although those gains were tempered with its Friday losses, its medium term uptrend remains intact suggesting further upside gain is expected towards its Aug 03’08 high at 0.9344 level. An invalidation of the latter will turn focus to the 0.9592 level, its July 27’08 high. This view is supported by its weekly RSI. To the downside, while Friday ended as a negative day, building on that weakness will leave the pair vulnerable to the downside towards the 0.9091 level, its Oct 08’09 high ahead of the 0.9000/0.8950 levels where a reversal of roles is expected. However, if that fails, a decline towards the 0.8754 level, its Oct 08’09 low and the 0.8567 level, its Oct 02’09 low is likely. On the whole, broader bias remains higher in the medium term as further higher prices are targeted.

USDCAD

USDCAD: Set To Recover Further Higher.

USDCAD - With a two-day recovery off its medium low at 1.0206 pushing the pair higher on Thursday and Friday to close marginally low at 1.0370, risk of further upside gains remains on the cards especially now that a weekly hammer has formed. Resistance levels are located at the 1.0590 level with a break of there setting the stage for a move higher targeting the 1.0991 level, its Sept 27’09 high and next the 1.1123, its Aug 17’09 high. We envisage the 1.0590 level should reverse roles and provide resistance thereby turning the pair lower again. Downside objectives are located at the 1.0299 level , its Sept 21’08 initially before its YTD low at 1.0206 and then its Jun 13’08 low at 0.9975. The immediate risk to USDCAD’s medium term downtrend is the hammer(bottom reversal signal) formed at the end of the week. A follow-through to the upside on that hammer will keep nearer term threats on the upside. On the whole, with a temporary halt in its MT downtrend seen, attention has now turned to the upside nearer term.

EURGBP

EURGBP: Rolls Over, Targets Lower Prices.

EURGBP - Having been maintaining its short term uptrend triggered off the 0.8401 level in late Jun’09 rising to an intra day high of 0.9412 on Tuesday, EURGBP was seen giving back some of those gains at the end of week after selling off sharply to a low of 0.9093 on Friday. This development has left the cross vulnerable to the downside and targets its Sept 30’09 low at 0.9076 where we expect a cap of that corrective declines. Its weekly RSI remains bearish supporting this view. However, if that level fails, losses could be seen towards its 0.8923 level, its Sept 23’09 low. Upside recovery if seen will target the 0.9158 level, its Oct 08’09 low with cut through there expanding further prices towards the 0.9299 level. Other resistance levels are located at the 0.9410 level and the 0.9499 level, its Mar’09 high and then the 0.9803 level, its Dec’08 high. On the whole, having halted its recent short term uptrend, risk has now shifted to the downside nearer term.

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Published on  Mon, Oct 19 2009, 13:28 GMT