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Markets

A good chance for the European currencies, but will they use it? (2)

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EURUSD – Testing 1.3026?

The Euro survived just above the support we presented in yesterday’s report 1.2883 with amazing accuracy (yesterday’s low was 1.2886). Then it went all the way up to break yesterday’s resistance 1.2942, and it is still approaching the suggested target 1.3026 as we speak (the high until the moment of preparing this report is 1.3016). Therefore, we await a test of the important resistance 1.3026, where there is the 2-month high. But, we will not lose interest in our newly found rising channel we talked about yesterday, and when we look at the hourly chart, we find that Friday’s dive has stopped at the bottom of a new rising channel which will be placed under our focus for today, knowing that the bottom of the channel is at 1.2872. Moreover, we find the area between Fibonacci 61.8% at 1.3075 and May 10th top 1.3092 to be very interesting. Thus, we recommend giving attention to all these areas, and we believe that each of them will play a role in dictating today’s direction! In case we break the support at 1.2872, we will drop with the Euro for today and probably the next few days, targeting 1.2792, and 1.2691. On the other side, the resistance is at the important 1.3026. If broken, the Euro will continue its bounce from the channel bottom, targeting 1.3092 & 1.3200.

Support:

• 1.2872: the bottom of the rising trend channel on the hourly chart.

• 1.2792: Friday’s low.

• 1.2691: Fibonacci 38.2% for the whole rise from 1.2150.

Resistance:

• 1.3026: last Tuesday’s & 2-month high.

• 1.3092: May 10th high.

• 1.3200: Apr 23rd low.

USDJPY – Wave C developing smoothly (2)

As we have said several times in last week’s reports, signs show that the possibility of a rising correction to correct the fall from June 3rd top 89.09 to July 16th low 86.25 is growing. On the top of these signs: the inverted hammer formation, which appeared on the daily chart, and the completed 5-wave move, and further more what looks to be the corrective waves (a) & (b) forming in an ideal manner (please refer to the attached chart), and wave (c) developing in an ideal fashion. Therefore, and even though we are negative about this pair on the medium term, we should not neglect these signs which force themselves upon us for today! Short term support is at 86.81, and if broken, the price will resume its drop after a 3-wave correction, targeting 85.84 & 84.81. Resistance is at 87.37. A break here indicates that the odds of c continuation of the correction of the 5 waves down from 92.87 are still massive. This will target 88.01, then 88.78. It is worth mentioning that breaking wave 5 bottom 86.25 even with a few pips would strongly indicate the termination of the correction we are currently living, and will officially announce a new wave down!

Support:

• 86.81: obvious hourly support, which has been tested several times during the Asian session.

• 85.84: Nov 30th 2009 low.

• 84.81: Nov 27th 2009 low, and the low of the last 15 years!

Resistance:

• 87.37: short term 61.8% Fibonacci level.

• 88.01: Fibonacci 61.8% for the drop from 89.09.

• 88.78: Fibonacci 38.2% level for the whole drop from 92.87 (the 5 waves down).

GBPUSD – All eyes on 1.5527!

The Pound broke the resistance specified in yesterday’s report 1.5482, and reached a new 5-month high at 1.5227, just 7 pips above Apr 15th unforgettable top. Therefore, and without a shadow of a doubt, the area 1.5520-1.5527 is the area to be watched today! We exactly remember what kind of reversal followed reaching these areas in April, and how the price dropped from here to the cycle low at 1.4227! The minute the price retreated from 1.5527, it has turned into an important resistance. In case we break this level, the Pound will prove its strength, and will establish that 1.5520 is nota real barrier under the current market conditions. This will be very positive for the technical outlook, and will give way to hit 1.5625 at the very least, and may be 1.5705 as well. On the other hand, if we retreat from 1.5527, we will drop to test the obvious short term support at 1.5446. If this level is broken, we can say with a lot of confidence that 1.5520 has caused a short term reversal once again (or even a medium term one). The targets for this break if it happens will be 1.5332, then the most important Fibonacci level at this stage 1.5277.

Support:

• 1.5446: obvious support/resistance area on intraday charts.

• 1.5332: last Wednesday’s low, and a previous well known support/resistance area.

• 1.5277: short term 61.8% Fibonacci level.

Resistance:

• 1.5527: today’s high at the moment of preparing this report, only pips above Apr 15th massive top 1.5520.

• 1.5625: Feb 16th low.

• 1.5705: Oct 13th 09 low.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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