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Wednesday, October 27, 2010

Forex Trader's Weekly Update (October 25 2010 to October 29 2010)

EUR/USD

EUR/USD's consolidation from 1.4150 extended further last week and such consolidations would likely continue further in near term. Below 1.3697 minor support will bring another fall to 38.2% retracement of 1.2587 to 1.4150 at 1.3553 and possibly below. On the upside, though, break of 1.4150 resistance will confirm that recent rally has resumed and should target medium term trend line resistance at 1.4550 next.

In the bigger picture, price actions from 1.6039 is a correction to long term rally from 0.8223 and could have finished down to 1.1875 already. Short term outlook will remain bullish as long as 1.3330 resistance turned support holds and further rally should be seen to upper trend line resistance (1.6039, 1.5143, now at 1.4572) next. Break there will target a new high above 1.6039. Though, break of 1.3330 will argue that whole rebound from 1.1875. This will also dampen this mentioned case and turn outlook bearish instead.

In the long term picture, the long term up trend from 2000 low of 0.8223 to 2008 high of 1.6039, price actions from 1.6039 are viewed as a correction only. Hence, we'd expect another high above 1.6039 eventually, after correction from 1.6039 is confirmed to be finished.

Pips Mover's Weekly Pivot Point for this week: 1.3917

Historical Levels up to date: 1.4865, 1.4675, 1.4420, 1.4090, 1.3840, 1.3600



GBP/USD

GBP/USD dropped sharply to as low as 1.5649 last week and the development suggests that rise from 1.5296 is finished. Also, considering bearish divergence condition in daily MACD. whole rally from 1.4230 might be finished too. In any case, short term outlook will remain bearish as long as 1.5877 resistance holds. Break of 1.5649 will target a test on 1.5296 support first. Though, above 1.5877 will flip intraday bias back to the upside for retesting 1.6105 first.

In the bigger picture, price actions from 1.3503 are viewed as consolidation to fall from 2.1161 only with rise from 1.4230 as the third leg. There is no clear indication that such consolidation is finished. Current rise from 1.4230 could extend to 1.7043 resistance and above. However, we'd expect strong resistance between 1.7043 and 50% retracement of 2.1161 to 1.3503 at 1.7332 and finally bring long term down trend resumption. In any case, a break of 1.4230 support will indicate that the consolidation is completed and down trend from 2.1161 is resuming for another low below 1.3503.

In the longer term picture, the corrective nature of the multi-decade advance from 1.0463 to 2.1161 as well as the impulsive nature of the fall from there suggests that GBP/USD is now in an early stage of a long term down trend. Another low below 1.3503 is anticipated after rebound from 1.3503 is confirmed to be completed.

Pips Mover's Weekly Pivot Point for this week: 1.5752

Historical Levels up to date: 1.9445, 1.8490, 1.7520, 1.6570, 1.6255, 1.5675





USD/CHF

USD/CHF's rebound from 0.9462 extended further to as high as 0.9803 last week. Considering bullish convergence condition in daily MACD, a short term bottom should be in place and strong rise is now is favor to 0.9932/1.0181 resistance zone in near term, with 55 days EMA (now at 0.9978). On the downside, below 0.9571 will flip intraday bias back to the downside for retesting 0.9462. Nevertheless, decisive break there is needed to confirm down trend resumption. Otherwise, we'd expect more consolidations first.

In the bigger picture, as noted before, the sustained break of 0.9634 low indicates that long term down trend from 2000 high of 1.8305 is resuming. While USD/CHF has made a short term bottom at 0.9462, there is no indication of medium term reversal yet. Outlook will stay bearish as long as 1.0330 resistance holds (38.2% retracement of 1.1729 to 0.9462 at 1.0328). The long term down trend is still in favor to continue towards 61.8% projection of 1.8305 to 1.1288 from 1.3283 at 0.8946, which is close to 0.9 psychological level.

In the longer term picture, the break of 0.9634 confirms that long term down trend from 2000 high of 1.8305 has resumed. There are various interpretation of the price actions. But after all, USD/CHF should be resuming the set of impulsive fall from 1.8305 to 1.1288. Hence, we'd expect next long term target to be 61.8% projection of 1.8305 to 1.1288 from 1.3283 at 0.8946, which is close to 0.9 psychological level.

Pips Mover's Weekly Pivot Point for this week: 0.9724

Historical Levels up to date: 0.9880, 1.0685, 1.0830, 1.0875, 1.1000, 1.1175



USD/JPY

USD/JPY edged lower to 80.83 last week but lacked follow through selling and recovered. In any case, outlook remains bearish as long as 81.91 resistance holds and we'd expect recent decline to resume sooner or later. Below 80.83 will target 61.8% projection of 92.87 to 82.86 from 85.92 at 79.73, which is close to 79.75 low. However, break of 81.91 will indicate that a short term bottom is formed and bring stronger rebound towards 83.15/83.97 resistance zone.

In the bigger picture, whole decline from 124.13 is still in progress and should now target 1995 low of 79.75. Also, considering that monthly MACD has crossed below signal line again, suggesting that USD/JPY is rebuilding downside momentum. 79.75 low would probably be taken out. Though, note that Japan could intervene any time to slow USD/JPY's fall and hence, the path would likely be very choppy. In any case, break of 85.92 resistance is needed to be the first sign of medium term bottoming while break of 94.97 is needed to confirm reversal. Otherwise, outlook will remain bearish.

In the long term picture, there is no indication of trend reversal yet and USD/JPY's long term down trend could still extend further to 1995 low of 79.75. We'd anticipate some strong support from 79.75 initially to bring rebound. Focus will be on whether 79.75 would hold or USD/JPY is indeed resuming the multi decade decline that started back in the 80's.

Pips Mover's Weekly Pivot Point for this week: 81.34

Historical Levels up to date: 93.50, 95.75, 98.00, 99.70, 101.35, 101.70, 103.00, 104.95, 105.50, 106.30, 107.20, 110.50



EUR/JPY

EUR/JPY dived to as low as 111.55 last week but was supported above 111.44 support and recovered. At this point, there is no confirmation of short term reversal yet and EUR/JPY's rise from 105.42 could still continue. Above 113.92 minor resistance will turn bias to the upside for 115.65. Break will target 38.2% retracement of 139.21 to 105.42 at 118.32. However, break of 111.44 will argue that whole rebound from 105.42 might be over and deeper fall should be seen t retest 105.42 low.

In the bigger picture, a medium term bottom should be formed at 105.42 already. Rebound from 105.42 is still in favor to extend further towards 55 weeks EMA (now at 119.21). Sustained break there will indicate that whole long term fall from 169.96 is finished too and will target 139.21 resistance and above. However, note that failure below the 55 weeks EMA will argue that long term down trend from 169.96 is still in progress for 100 psychological level and below before completion.

In the long term picture, up trend from 88.96 has completed at 169.96 and made a long term top there. Based on the rise from 88.96 to 169.96, we're favoring that fall from 169.96 is corrective in nature. But EUR/JPY would be contained above 88.96 key support level. We'll hold on to this view unless fall from 169.96 shows sign of acceleration.

Pips Mover's Weekly Pivot Point for this week: 113.12

Historical Levels up to date: 124.25, 126.50, 130.90, 133.25, 135.65, 138.00, 140.00, 151.95, 156.00, 156.85, 164.00





USD/CAD

USD/CAD's rebound from 0.9979 extended further to as high as 1.0371 last week before turning sideway. The development indicates that whole fall from 1.0671has completed. Hence, further rise is now in favor after finishing the consolidation from 1.0371. Above will target a test on 1.0671/5 resistance zone. On the downside, below 1.0167 will bring deeper pull back towards 0.9979 low. But we'd still anticipate strong support from parity to contain downside.

In the bigger picture, USD/CAD did get strong support from parity as we expected and the development reaffirms our view that price actions from 1.0851 are just consolidation to rise from 2007 low of 0.9056 only. Break of 1.0671 resistance will indicate that such rebound from 0.9056 is resuming for another high above 1.0851. On the downside, though, break of 0.9979 will invalidate this view and target a test on 0.9056 instead.

In the longer term picture, firstly, there is no clear indication that the long term down trend from 2002 high of 1.6196 has reversed. Secondly, the medium term fall from 1.3063 is so far looking corrective. Hence, we're slightly favoring the case that price actions from 0.9056 are developing into a long term corrective pattern.

Pips Mover's Weekly Pivot Point for this week: 1.0253

Historical Levels up to date: 0.9805, 1.0060, 1.0270, 1.0470, 1.1025, 1.1140, 1.1270, 1.0160, 1.1940, 1.2040, 1.2225, 1.2475



AUD/USD

AUD/USD continued to consolidate below 0.9998 last week and such consolidation would likely extend further this week. Below 0.9661 will bring deeper fall to 38.2% retracement of 0.8770 to 0.9998 at 0.9529 and below. On the upside, break of parity is needed to confirm rise resumption. Otherwise, risk will remain mildly on the downside.

In the bigger picture, medium term rise from 0.6008 is still in progress and has resumed the longer term up trend. In any case, outlook will remain bullish as long as 0.9220 resistance turned support holds. Current rally should extend towards 61.8% projection of 0.6008 to 0.9404 from 0.8066 at 1.0165 next.

In the longer term picture, long term up trend from 0.4773 should have resumed. We're now looking at next long term target of 100% projection of 0.4773 to 0.9849 from 0.6008 at 1.1084.



Pips Mover's Weekly Pivot Point for this week: 0.9827

Historical Levels up to date: 0.7695, 0.7870, 0.7930, 0.8000, 0.8200, 0.8350, 0.8670

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