EURO
The pair was able to incline to reach some of the suggested upside targets at 1.4620 in our last monthly report, yet the resistance levels around 1.4840 were able to reverse the pair to the downside, as it trades below the 61.8% correction at 1.4620.
Monthly Technical Analysis - October 2009
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GBP
The pair failed to maintain trading above 1.6735 and 1.6600; to currently trade below 1.6215 and confirm the bearish trend.
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JPY
The pair declined, as we expected last month, yet it hasn't engaged in a bullish correction to continue the decline towards 88.30.
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CHF
The pair declined to reach the 76.4% correction at 1.0275, yet has failed to close below this level, which may result in an upside correction before continuing the decline.
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CAD
The pair last month consolidated with slight tendency to the downside, in an attempt to maintain trading below the 1.0660 level which has failed, where we see the pair currently below the 20 week MA at 1.1025.
The first image shows that the pair is still within a bullish channel, with key support at 1.4290; followed by the 20 week MA at 1.4220 and the 50% correction at 1.4180. These levels represent good support levels, when the pair declines due to the overbought signals appearing on the momentum indicators. Despite these signs, momentum indicators have yet to give a sign of adjustment on the RSI; whereas, the stochastic is attempting to do so. This makes us believe the pair is to decline to gather bullish momentum from the support mentioned above to continue the medium term uptrend. The 10 MA at 1.4410 is also a good support on the intraday and short term.
In the first image, we see that the pair has built a base above the 76.4% correction at 10275, which may result in an upside movement to retest the neckline for the bearish technical pattern at the 61.8% correction at 1.0660. This incline is supported by the positive adjustment on the stochastic indicator; whereas the RSI is nearing oversold areas.
On the monthly charts; the pair attempted to remain within the bullish channel last month, which had started on February 2002, where the resistance level has shifted to 1.4740. To breach this level and maintain trading above it, the pair must gather the bullish momentum needed after slightly correcting to the downside towards the 20 month MA at 1.4220
Once again, we move back to the weekly charts, where we see a harmonic pattern reach a potential reversal zone near the 61.8% correction, as far as trading is below this level at 1.4740. The pair is to target levels between 1.4275 an 1.3940; representing the 23.6% and 38.2% corrections for the bullish wave from March 2009 to September 2009.
These technical facts make us believe the pair is to decline, yet may not alter the general and medium term up trends since it is just a correction over the intraday and short term.
Support 1.4410 1.4290 1.4180 1.4060 1.3910
Resistance 1.4620 1.4785 1.4860 1.4965 1.5155
Recommendation Based on the charts and explanations above, our opinion is selling the pair from 1.4620 to 1.4275 and stop loss above 1.4785 might be appropriate.
With the breach of 1.6215, a bearish technical pattern was confirmed to take the pair towards the 38.2% correction at 1.5710 and perhaps extend to the 50% correction at 1.5275. The ADX indicator on the weekly charts shows that the direction has altered to the downside; whereas the RSI is supporting it as well. Despite the stochastic trending in oversold areas, we still see no signs of adjustment.
Looking at the daily charts, we see that the bearish channel continues to dominate movements, where the key resistance for the channel resides at 1.6565 and any trading below this level will keep the downtrend valid this month. On the other hand, the pair stopped declining after reaching the 100% expansion at 1.5810, which must be breached to trigger further declines towards the key support for the channel at 1.5705 and the 161.8% at 1.5240, with the latter being the most probable target. Momentum indicators are adjusting to the upside, which might result in an upside correction before resuming the decline.
From here, we see the pair is in need for an upside correction before reversing back to the downside to continue the bearish wave; where we don't expect this correction to reach levels above 1.6215 and at most 1.6350, since as far as trading remains below the latter, the pair is to decline.
Support 1.5810 1.5705 1.5610 1.5550 1.5465
Resistance 1.6070 1.6170 1.6215 1.6365 1.6565
Recommendation Based on the charts and explanations above, our opinion is selling the pair from 1.6170 to 1.5705 and stop loss above 1.6375 might be appropriate.
The image above shows that the pair is still within a medium term bearish channel, where as far as trading is below the key resistance for the channel at 96.10, the trend remains to the downside on the medium term. On the other hand, trading has been trapped between the 76.4% correction for the incline from 21-01-2009 to 06-04-2009 at 90.55 and the support level at 89.00, which is followed by a critical level at 87.80. We see several attempts on momentum indicators to correct to the upside; whereas, the ADX is still supporting the decline. All these signs make us wait for a clear breakout above 90.55 to confirm the bullish trend and relieve momentum indicators before reversing back to the downside on the medium term.
The 88.05 level is the 100% expansion for a possible harmonic pattern, seen in the image above, which will be confirmed with the 88.05 level remaining intact. If so, the pair is to correct to the upside towards 91.70 and perhaps 93.00; representing the 38.2% and 50.0% correction for the short term decline that started on 10-08-2009.
From here, we expect a bullish correction during this month despite the overall decline. Note that trading below 88.05 and breaching 87.80 will result in a rapid decline to cancel any expected bullish correction.
Support 89.05 88.70 88.05 87.80 85.50
Resistance 90.50 91.70 92.30 92.30 92.30
Recommendation Based on the charts and explanations above, our opinion is buying the pair from 89.05 to 93.00 and stop loss below 87.80 might be appropriate.
Looking at the overall movement, we see the direction is still to the downside on the medium term with a key resistance at 1.0710, where as far as trading is below this level, the pair is to continue declining after retesting the mentioned neckline.
From here, we expect the pair to correct to the upside this month as far as 1.0180 remains intact. However, the overall decline remains as far as trading is below 1.0710
Support 1.0275 1.0180 1.0130 1.0060 1.0000
Resistance 1.0405 1.0490 1.0565 1.0660 1.0710
Recommendation Based on the charts and explanations above, our opinion is buying the pair from 1.0275 to 1.0565 and stop loss below 1.0130 might be appropriate.
In the image above; we see the pair is still targeting 1.0325 at the very least, where this level is the 61.8% expansion for the direction seen in the image; whereas the MACD on the weekly chart is confirming the attempts; and the RSI is still between the 50 and 30 marks. The stochastic indicator is showing signs of a possible upside correction, yet as far as trading is below the 20 MA at 1.1025, the downside trend will target the mentioned levels at the 61.8% expansion.
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Looking at a broader picture, we see trading is consolidating between the 50% and 61.8% correction, seen in the image above at 1.1065 and 1.0600 respectively. For the expected decline to occur, the pair needs to breach the 61.8% to the downside
The pair attempted to exit the downside channel, yet returned once again below the key resistance for the channel, where it is currently trading near 1.0750; whereas the 20 day MA is also a forming a resistance level, pressuring the pair to the downside. Momentum indicators have now adjusted to the upside alongside the MACD, which may result in high volatility before continuing the decline. The 1.0640 remaining intact is crucial for the decline to continue.
From here, we expect the pair to decline this month despite the positive signs seen, to breach the 1.0600 level and maintain trading below it on the daily charts to trigger a new bearish wave targeting the suggesting levels.
Support 1.0660 1.0600 1.0560 1.0480 1.0325
Resistance 1.0845 1.0925 1.1065 1.1205 1.1370
Recommendation Based on the charts and explanations above, our opinion is selling the pair with the breach of 1.0600 to 1.0325 and stop loss above 1.0845 might be appropriate.
