EURO
The 1.5135 area held steady against the pair’s upside attempts, and this level resembles the 76.4% correction shown on the provided chart below. This level’s stability created a bearish harmonic pattern which might be affecting the pair over the coming period.
Monthly Technical Analysis - December 2009
_________________________________________________________
-----------------------------------------
GBP
We mentioned in November’s Report that consolidation above 1.6675 is very critical to confirm the bullish direction for the pair, yet we can see that the pair settled for reaching 1.6870 (nearly 500 points from last month’s suggested level at 1.6360) and after that the pair resumed to the downside. This scenario confirmed that the pair did not settle for the Double Zigzag correction and might be heading for a Triple correction or a flat wave where the pair completed the W wave (or A of the flat wave) and completed X (B wave in case of the flat wave) and now we are waiting for further decline to form the Y or A according to the scenario that the current bearish wave adopts.
-----------------------------------------
JPY
Breaching 87.90 failed our expectations last month, and the pair declined sharply after trading below the mentioned level, leading the pair towards 84.79; now the pair is heading to the upside and stabilized above 87.90 again which increases the likelihood to the upside yet temporarily.
-----------------------------------------
CHF
The pair breached the major resistance level for the downside wave which now resides at 1.0135 and by that the pair has room extend its upside correctional move which follows the completion of the downside targets which were set in our previous month’s report. On the chart provided below, we can see that the pair resumed trading below the 50 Days MA at 1.0165 and that might pressure the pair lower before resuming the upside correction.
-----------------------------------------
CAD
The pair is rushing to the upside in new attempts to breach the major resistance level for the downside wave at 1.0625 which is followed by the focal resistance for the downside wave at 1.0660. Stochastic provided an upside reversal while RSI is leaning towards positivity supporting the expectations for a clear breach to the mentioned resistance and the start of a new bullish wave.
The weekly chart above shows the harmonic structure mentioned, where we can see that the pair is targeting the 23.6% correction at 1.4515 and might extend further towards 1.4125. Stochastic and RSI confirm the downside expectations which will remain valid as far as 1.5135 is intact.
On the chart above, we can see that the pair might be capable of completing a bullish pattern shall it declined slightly and does not exceed 1.0035 with a daily closing, and from there we will see a clear upside correction for the downside wave that started on 24-06-2009.
In terms of Elliot Analysis combined with Fibonacci numeration, we can detect a structured Impulsive Wave, where the third wave managed to record a medium average extension. The third wave ended at 200% correction from the first wave, and this level was at the same time equivalent to 161.8% of the length of that same wave. The possible target for the fourth wave combined with the bearish harmonic pattern’s target around 1.4525; shall the fourth wave indeed end at the specified target and according to Elliot rules the fifth wave should be almost equal to the first wave incase the third wave extended, and by that the correctional target will be at 261.8% from the first wave and the possible target is around 1.5800. The chart provided above is capable of explaining the scenario, while ADX insists on detecting the upside direction.
The upside wave that developed resides within the medium term bearish channel where its major resistance is at 95.35 and seemingly the pair is heading to test the 20 & 50 MA at 91.60 and 93.80 respectively, and the weekly chart shows a positive reversal on Stochastic accompanied by a reversal on RSI confirming the heading to the mentioned levels.
When the pair reaches the suggested areas, we recommend to remain updated with our daily and weekly reports as the pair remains within the medium term bearish trend, and since trading is below 95.35 the medium term downside wave is valid.
Support 89.80 88.40 87.90 87.10 85.65
--------------------------------------------------------------------------------
Resistance 90.90 91.60 92.75 93.80 95.35
--------------------------------------------------------------------------------
Recommendation Based on the charts and explanations
The second chart above we can see that the pair was incapable of trading long below the 100% extension and by that the pair might be in need on an upside correction that might take it towards 1.0385 and might even extend towards 1.0680; Stochastic and RSI confirm our expectations for this month.
From here, we see that this month the pair might indulge in an upside correction before resuming the downside wave over the medium term; the upside direction remains valid as far as trading is above 1.0035 with daily closings.
Support 1.0070 1.000 0.9905 0.9845 0.9790
--------------------------------------------------------------------------------
Resistance 1.0225 1.0385 1.0575 1.0680 1.0785
--------------------------------------------------------------------------------
Recommendation Based on the charts and explanations above, our opinion is buying the pair from 1.0070 targeting 1.0385 and stop loss below 0.9900 might be appropriate this month
On the chart above, we can see that the pair is trading above the 50 MA at 1.0565 which is further reason for us to believe that the pair will breach the major resistance for the downside wave and will continue higher towards 1.0785 and then 1.0960 which are the 38.2% and the 50% correction levels respectively for the downside wave that started on 08-07-09 and ended on 15-11-09.
---------- EDUCATION --------
-----TRADING METHODS ------
--------- FOR TRADERS --------
------------ OTHER -------------
_______________________________________________________________________________________________________
The weekly chart seen above shows that the pair was incapable of closing below the 61.8% extension which pushed it to the upside; the secondary image over daily basis shows that the pair is consolidating above the 61.8% correction and that is pushing the pair towards the 61.8% extension close to the previous top at 1.0820 and then we might see the extension towards the 100% at 1.1075. The targets thereby will be acquires as far as trading is steady above the 20 Weeks MA at 1.0715.
Therefore, we see that stabilizing above 1.0460 will pressure the pair to the upside this month targeting 1.0715-1.0785 and then 1.0960 and we might witness an extension to the bullish move towards 1.1075. We do no exclude the possibility for heightened volatility every now and then, yet as we mentioned the stability of 61.8% correction will keep trading to the upside this month.
Support 1.0460 1.0385 1.0280 1.0235 1.0160
--------------------------------------------------------------------------------
Resistance 1.0715 1.0785 1.0960 1.1075 1.1135
--------------------------------------------------------------------------------
Recommendation Based on the charts and explanations above, our opinion is buying the pair from 1.0520 targeting 1.0960 and stop loss below 1.0235 might be appropriate this month
We expect that the D3 scenario is more likely and we can see that the W Wave requires longer time and length and the X wave and that is why the pair is likely trading within the Y Wave, yet without ignoring the possibility or really completing the C wave which might be steeper incase the scenario was confirmed. The current downside wave targets areas among 1.6155 and 1.5980 before assessing the possibility for an upside rebound. Stochastic confirms our expectations, while OsMA trades near zero and that assures that we are in a bearish wave that might be the last over the short term. (We recommend going over last month’s report for further details over our expectations for a new upside wave after the end of the current bearish trend).
Therefore, we expect a downside wave to retest areas around 1.6155 and then resuming to the upside once again. The upside direction expected with the end of this correction requires the stability of 1.5800.
Support 1.6360 1.6240 1.6155 1.5980 1.5800
--------------------------------------------------------------------------------
Resistance 1.6570 1.6675 1.6740 1.6835 1.6975
--------------------------------------------------------------------------------
Recommendation According to the charts and explanations above, our opinion is buying the pair from 1.6155 targeting 1.7370 and stop loss below 1.5890 might be appropriate this month
As for the classical outlook, we can see that the pair managed to breach the main support level for the upside wave which increases the likelihood for a downside wave which will be confirmed further with the breach of 1.4840.
Due to the mentioned facts, we expect the initiation of a downside correctional wave that might take the pair towards 1.4515 and after that a new bullish wave will start targeting 1.58 areas. The downside correction remains valid this month as far as trading is below 1.5035 while the expected upside wave after the end of the correction will remain valid as far as trading is above 1.4125.
Support 1.4840 1.4710 1.4615 1.4515 1.4420
--------------------------------------------------------------------------------
Resistance 1.4970 1.5065 1.5135 1.5250 1.5380
--------------------------------------------------------------------------------
Recommendation Based on the charts and explanations above, our opinion is for remaining updated with weekly analysis to track the correctional wave and the following suggested upside wave with the end of the correction
