Monday, December 5, 2011

Weekly Technical Overview, Forex


Bullish above 1.0330; bearish below 1.0150.

The Aussie breached the key 0.9860 level on Monday and duly rallied, reaching a peak of 1.0330 on Wednesday before trading sideways for the rest of the week. The outlook this week is likely to be initially determined by a break of the congestion range that formed between Wednesday and Friday from 1.0330 down to 1.0150.

A close below 1.0150 and next support is at the lows of the long bullish bar that formed on Wednesday at 0.9940 followed by the peak of November 24 at 0.9780.

A resumption of the gains this week will be signalled by a close above Wednesday’s high of 1.0330. Next resistance is then at the high of November 3 at 1.0450 followed by the twice-tested peak of 1.0760 from September 1 and October 27.

In the bigger picture, as long as the Aussie is below its peak of 1.108, it remains in correction mode. That outlook is supported by the fact the daily ranges are still high and major bottoms are usually formed on lower volatility while tops and the early stages of a downtrend are made on high volatility.

Sup: 1.0150 0.9940 0.9780
Res: 1.0330 1.0450 1.0760

Bearish below 1.3260; bullish above 1.3550.

If you are reading or listening to mainstream financial media you could be forgiven for believing the euro is on the verge of collapse. It is in fact a long way above its all-time lows of under 85 US cents, but it is just above an important support level, a close below which could send it back to its 2010 levels. That level is 1.3140 from October 4.

That level was rejected in the prior week, but the gains were limited to a peak of 1.3550 last week, reached on a bearish candlestick on Friday. The outlook this week depends on a move beyond the range of Friday’s peak and Wednesday’s lows: 1.3550 to 1.3260.

A move below 1.3260 and next support is at the low of November 25 at 1.3210 down to the lows of October 4 at 1.3140. A close below the latter level and the downtrend that started in May this year resumes.

A move above 1.3550 and next resistance is at the well-tested peak of November1 at 1.3870, which is just above the Fibonacci 62% retracement of the losses since late October (1.4250 – 1.3210). Next resistance is at the peak of October 26 at 1.3980.

Sup: 1.3260 1.3210 1.3140
Res: 1.3550 1.3870 1.3980

Bearish below 1.5470; bullish above 1.5780.

A rally last week failed to spark upwards momentum and after making gains till Wednesday, a large proportion of those gains were forsaken in the last two trading days.

The outlook this week is bearish if sterling moves below Tuesday’s low of 1.5470. In that event, sterling could then retest the October lows of 1.5270. A close below that level and the downtrend that started in April this year resumes. Next support is at the July 2010 lows of 1.4940.

A close above last week’s peak of 1.5780 and sterling could then travel to the peak of November 18 at 1.5890 which also happens to coincide with the Fibonacci 62% retracement of the losses since October 31 (1.6170 – 1.5420). Next resistance is at the high of November 8 at 1.6130.

Sup: 1.5470 1.5270 1.4940
Res: 1.5780 1.5890 1.6130

Bullish unless below 77.27.

The yen made good gains on Monday last week but then spent the rest of the week consolidating those gains. That has created a small range between highs of 78.28 and lows of 77.27, a break of which should determine this week’s outlook.

A move below Wednesday’s low of 77.27 and next support is at the lows of November 18 at 76.53. A move below this critical level and there is an increased chance that the USD rally since late October is a dead cat bounce with next support at the low of October 30 at 75.31.

A move above last week’s peak of 78.28 and next resistance is at the high of November 1 at 78.99 then the high of October 31 at 79.53.

Sup: 77.27 76.53 75.31
Res: 78.28 78.99 79.53

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