EURO
The pair ended last month's trading above the 50% correction near 1.4180 for the decline that started on 15-07-2008 and ended on 27-10-2008. The pair failed to close below the low at 1.3830 and therefore didn't reach our suggested downside targets where it returned to trade sideways once again for the tenth consecutive week between the 1.4336 resistance and 1.3747 support.
Monthly Technical Analysis - August 2009
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GBP
Trading continued to consolidate during the past month before ending the last day of the month above 1.6590 to support the continuation of the bullish trend. This level has now become a support and is a pivot level for the current month
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JPY
High volatility ended with a slight decline for the pair where it is still within a downside channel on the medium term as seen in the image below.
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CHF
Mixed trading continues as it is difficult to currently predict the short term and intraday trends due to the intervention of the Swiss National Bank. We see the pair had failed to maintain higher levels for a long time as it currently faces strong resistance levels yet at the same time we see the support levels that extend from 1.0660 to 1.0570 were able to limit the declines.
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CAD
A sharp decline for the pair during last month's trading where we see it is still declining neglecting the oversold signs appearing on several momentum indicators.
In the above image, we see that closing above the 50% correction may open the way for the pair to target the 61.8% correction at 1.4620. The ADX indicator is supporting the uptrend at 32.44 on the daily charts and ever since April the DI+ is above DI-. The MACD is also trading above the zero line to the upside also supporting our bullish overview.
On the weekly charts, we see a bearish technical pattern targeting 0.9910, yet the neckline resides near the critical support areas between 1.0680 – 1.0570 and therefore the pair must breach and confirm the breakout of the 1.0570 level.
In the second image, we notice the 50 day MA at 1.4045 within a bullish channel and as trading maintains levels above the MA, the short term trend remains to the upside whereas above 1.3775 (the key support for the channel) will keep the medium term trend bullish. A strong resistance resides at 1.4300 and extends to 1.4335 where it is important to breach this level for the short term trend to continue.
The third image on the weekly charts shows the possibility of the formation of a bearish harmonic pattern with a PRZ at 1.4620 and 1.5155 as they represent the medium term targets as far as 1.3735 remains intact. The Envelopes indicator near 1.4145 is supporting the pair on the short term
All these technical reasons make us believe the bullish trend is to continue this month especially if trading maintains levels above 1.4300 and as far as 1.4045 remains intact on the short term and 1.3735 on the medium term.
Support 1.4145 1.4045 1.3870 1.3735 1.3560
Resistance 1.4335 1.4425 1.4500 1.4620 1.4785
Recommendation Based on the charts and explanations above, our opinion is buying the pair from 1.4145 to 1.4500 and stop loss below 1.4000 might be appropriate.
In the above image, we see the pair trading within a bullish channel with a key support at 1.6240. The 50 day MA at 1.6340 is also a good support for the pair which will confirm the uptrend with the adjustment of the stochastic indicator on the daily charts. The 50% correction at 1.6815 for the decline from 15-07-2008 to 23-January 2009 represents the first target for the pair.
In the second image, we see the pair was able to maintain levels above the 200% extension for the bullish wave that ended on 09-02-2009. Most of the time in impulsive wave and zig-zag, the pair reaches the 200% and 261.8% correction levels and in a double zig-zag, there is a possibility for the pair to target 1.7035 and extend towards 1.7385. We have yet to determine the type of wave due to technical reasons yet as far as trading is above 1.6460 on the short term and 1.5900 on the medium term, the uptrend will prevail.
Hence, we expect the trend for this month to be to the upside and will be confirmed with the breach of 1.6815. Trading above 1.6590 will confirm the uptrend on all timeframes whereas 1.6240 remaining intact will keep the medium term trend to the upside as well.
Support 1.6590 1.6460 1.6340 1.6240 1.6135
Resistance 1.6815 1.6910 1.7035 1.7120 1.7385
Recommendation Based on the charts and explanations above, our opinion is buying the pair from 1.6590 to 1.7035 and stop loss below 1.6240 might be appropriate.
Trading below 98.40 will keep the downtrend despite all the volatility where this level is the key resistance for the downside channel. The ADX indicator on the weekly charts is still bearish whereas the stochastic indicator is attempting to provide a bearish crossover and the RSI is neutral yet near an oversold area.
A broader look at the pair on the weekly charts, we see the pair is still affected by a long term classical bearish pattern still targeting lower levels near 80.40. The decline may not be easy as it may experience high volatility due to the several support levels yet as far as 101.70 remains intact, the medium term trend is to the downside.
On the daily charts, a downside channel with a key resistance at 1.0925 is regulating trades where as far as trading remains below this level, the short term downtrend will continue as it is supported by the 50 day MA at 1.0795; whereas the 23.6% and 38.2% correction at 1.0865 and 1.1025 respectively represent strong resistance levels. Once again, the downtrend will be confirmed with the breach of the 1.0570.
In the above image, we see a descending channel with a key resistance at 1.1425 where any trading below this level will keep the downtrend whereas the pair is currently trading above a support level at 1.0670 and 1.0535 which is supported by the oversold signs and the adjustment of the stochastic to the upside. Also, the 20 day MA at 1.1125 is a good resistance for the pair.
In the third image, the pair was able to trade below 1.0790 which may support the decline towards 1.0315 where reaching this level is possible as far as 1.1640 remains intact on the medium term, 1.1390 on the short term and 1.0790 on the intraday term.
From here we see that this month will be bearish yet we warn you from the possible volatility that may occur due to the oversold signals on the momentum indicators.
Support 1.0670 1.0535 1.0430 1.0315 1.0200
Resistance 1.0815 1.0910 1.1025 1.1190 1.1390
Recommendation Based on the charts and explanations above, our opinion is selling the pair from 1.0795 to 1.0315 and stop loss above 1.1025 might be appropriate.
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On the daily charts, the short term downtrend prevails despite all the fluctuations that occurred last month where we see the key resistance for the channel at 96.50 is protecting the decline confirmed by the adjustment of the stochastic to the downside whereas the ADX indicator is slightly supporting the bullish trend. As a result, we believe the pair is to experience further volatility yet the general trend is to the downside.
Hence, we expect the pair to decline this month as far as 96.50 is intact and a breach of 93.65 to the downside will confirm this trend.
Support 94.20 93.65 92.60 91.90 90.70
Resistance 95.15 96.50 97.40 98.40 99.35
Recommendation Based on the charts and explanations above, our opinion is selling the pair from 95.15 to 92.50 and stop loss above 96.50 might be appropriate.
Back to the weekly charts, the pair failed since 27-08-2008 to close below the 61.8% correction at 1.0655 where we currently need a close below this level for the pair to target the 76.4% correction at 1.0270. Failure to do so will keep the pair affected by the stochastic indicator nearing oversold areas.
Confusion could be witnessed this month yet we are biased more towards the downside for the above mentioned reasons and this trend is to remain as far as 1.1090 remains intact on the short term and 1.1280 on the medium term.
Support 1.0640 1.0570 1.0465 1.0270 1.0130
Resistance 1.0795 1.0925 1.1025 1.1090 1.1280
Recommendation Based on the charts and explanations above, our opinion is selling the pair from 1.0795 to 1.0465 and stop loss above 1.1090 might be appropriate.
On the weekly charts, we see the possibility of a bearish technical pattern with a neckline at 1.0910 where trading is currently below it and may open the way for the pair to target 1.0390 yet at the same time the 61.8% correction at 1.0590 resides ahead of it and may be the initial target for the pattern.
The pair has entered in an oversold area as seen on the Stochastic indicator which may halt the decline yet we should note that the pair may neglect these signs and continue declining towards the 61.8% correction.
