Forex Trader's Weekly Update (July 19 2010 to July 23 2010)

 

EUR/USD  

 

EUR/USD's rebound from 1.1875 extended further to as high as 1.3006 last week. The strong break of the falling trend line resistance and sustained trading above 55 days EMA suggests that fall from 1.5143 is finished at 1.1875. Initial bias will remain on the upside this week and further rise should be seen to 1.3105/3123 level next (38.2% retracement of 1.5143 to 1.1875 at 1.3123, 161.8% projection of 1.1875 to 1.2466 from 1.2149 at 1.3105). Though, as such rise from 1.1875 is viewed as a correction only, upside should be limited by 1.3105/3123 level and bring reversal. On the downside, below 1.2865 minor support will turn intraday bias neutral and bring consolidations. But break of 1.2522 support is needed to indicate that EUR/USD has topped. Otherwise, another rise remain in favor until meeting mentioned target.

 

In the bigger picture, while a medium term bottom is in place at 1.1875, there is now indicate of trend reversal yet. Rise from 1.1875 is viewed as a correction, or part of consolidation in the larger decline only. Whole fall from 1.6039 is still expected to continue to 1.1639 support and below. However, considering bullish convergence condition in weekly MACD, decisive break of mentioned 1.3105/3123 level will argue that whole fall from 1.6039 might have finished totally at 1.1875 and will turn focus to 55 weeks EMA (now at 1.3475) for more evidence.

 

In the long term picture, considering 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 strong support between 61.8% retracement of 0.8223 to 1.6039 at 1.1209 and 1.1639 support to contain downside and bring another long term up trend. However, note that sustained break of 1.1209 key fibonacci level will dampen this view and open up the case of a take on parity.

 

Pips Mover’s Weekly Pivot Point for this week: 1.2826

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

 

GBP/USD   

 

GBP/USD surged to as high as 1.5470 last week but formed a temporary top there and retreated. Initial bias is neutral this week and some consolidations would be seen first. However, note that the strong break of the falling channel resistance argue that whole decline from 1.7043 is finished at 1.4230 already. Hence, another rise will remain in favor as long as 1.4947 support holds. Break of 1.5521 resistance will confirm this bullish case and target 61.8% retracement of 1.7043 to 1.4230 at 1.5968 next. However, failure below 1.5521, followed by break of 1.4947 will revive the case that fall from 1.7043 is still in progress and will flip intraday bias back to the downside for another low below 1.4230.

 

In the bigger picture, the sustained trading above medium term falling channel argues that whole fall from 1.7043 is finished at 1.4230 already. Break of 1.5521 resistance will confirm this bullish case. Also, this will indicate that rise from 1.4230 is the likely the third leg of the whole consolidation pattern from 2009 low of 1.3503. In such case, stronger rally would be seen to 1.7043 resistance and possibly above before long term down trend resumes. On the downside, failure below 1.5521 resistance and break of 1.4947 support will revive that case that fall from 1.7043 is still in progress for 1.3503 low.

 

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: 1.5250

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