EURO
Last month’s trading ended above the 50% correction, as seen in the image below, making us hold onto our outlook to the upside, as far as this correction level remains intact.
Monthly Technical Analysis - September 2009
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GBP
The decline witnessed last month took the pair to the support level near 1.6100, yet we currently see bullish signs that may affect the Cable and result in an incline this month.
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JPY
Thin trading was witnessed last month, as the pair slightly declined by the end of trading. It seems like the pair is in need for an upside correction, which will be explained in the first image.
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CHF
Several attempts, during the past month to breach the key resistance for the downside channel, have failed and we currently see the pair trading below the 61.8% correction, which supports the downtrend this month.
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CAD
Last month’s trading confirmed the downside channel, as the pair reversed from the key resistance, where we expect the pair to continue declining this month as well
We see that the ADX and MACD indicators on the weekly charts; support the uptrend, whereas the major upside channel with the key resistance at 1.4045 is protecting the volatile incline. Note that the 50% correction at 1.4185 remains a vital support level this month. The RSI is trending the upside, where all these classic signs show that the pair is to target the 61.8% correction at 1.4620.
The consolidation recently seen on the pair was near the 61.8% correction at 1.0600, where we see that the stochastic indicator does not have enough bullish momentum to rebound the pair to the upside. All that is needed now is a daily close below 1.0565, to confirm the decline; whereas the 50 MA at 1.0730 is protecting the decline and the key resistance for the bearish channel at 1.0670, is providing the 61.8% correction with more strength.
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.
On the medium term, since the pair maintained trading above the 50% correction, it will open the way towards the 61.8% correction at 1.4620. The sharp decline that started in July 2008; may not feel that the 61.8% correction is sufficient and perhaps complete a possible bearish harmonic pattern with a potential reversal zone between 1.5160 and 1.5590. This assures that the pair is in an uptrend and any trading above 1.4185 will hold this direction on the short and intraday trends, whereas maintaining trading above 1.3960 will keep the uptrend on the medium trend.
All these technical signals make us believe the pair is to incline this month, as far as 1.4185 and 1.3960 remain intact respectively.
Support 1.4225 1.4185 1.4125 1.4045 1.3960
Resistance 1.4425 1.4490 1.4545 1.4620 1.4785
Recommendation Based on the charts and explanations above, our opinion is buying the pair from 1.4225 to 1.4620 and stop loss below 1.3960 might be appropriate.
On the weekly chats, we see a bullish candlestick with a lower wick building a base on the 20 week MA near 1.6095, just ahead of the 38.2% correction at 1.6030. Any trading above this correction level will maintain the incline this month, supported by the bullish adjustment on the stochastic indicator and the weakness of the downtrend on the ADX indicator, to help the pair gather the bullish momentum it needs.
The second image shows the false breakout that occurred for the upside channel. What stands as an obstacle for the pair are the previous peaks at 1.6595 and 1.6630; where we see that the pair will attempt to breach these levels this month and maintain trading above them, as the pair attempts to gather the bullish momentum needed from the key support for the channel at 1.6320.
This month we advise to remain cautious, as trading may be volatile between 1.6030 and 1.6620 on the short term an intraday basis. However, breaching the resistance level at 1.6630 will open the way to retest the key resistance for the channel, as seen on the image above at 1.7240 on the medium term.
Support 1.6320 1.6240 1.6135 1.6030 1.5915
Resistance 1.6560 1.6595 1.6675 1.6815 1.6910
Recommendation Based on the charts and explanations above, our opinion is buying the pair from 1.6340 to 1.6910 and stop loss below 1.6030 might be appropriate.
As we see, momentum indicators are adjusting the upside supporting the bullish candlestick formation on the daily charts that had occurred above the 61.8% correction at 92.70, where as far as trading remains above this level, the trend will be to the upside. This expected incline is within a downside channel with a key resistance near 97.00, which is supported by the ADX indicator showing a downtrend on the medium term. The 94.10 – 94.30 zone represents a neckline for a possible bearish technical pattern and the 50% correction; where we believe the pair is to retest these levels at the very least before resuming the decline.
The weekly chart shows a medium term decline within a channel with a key resistance at 98.35, where any trading below this level will hold the direction. We see bearish candlestick formations, as seen on the secondary image, alongside a possible bearish technical pattern with a neckline at 92.30 which may result in further declines.
These facts make us believe that the pair is to fluctuate this month; starting with a slight incline before reversing back to the downside. A breach of the 92.30 level to the downside will result in a vigorous decline, after correcting to levels near 94.30 – 95.15. The 97.00 level remaining intact will cause a gradual decline.
Support 92.60 92.30 90.70 90.10 89.05
Resistance 93.05 94.30 95.15 96.50 97.00
Recommendation Based on the charts and explanations above, our opinion is selling the pair from 94.10 to 90.70 and stop loss above 96.50 might be appropriate.
In the second image, we see a possible scenario for an Elliott wave cycle which will depend on several factors. The pair is currently forming the fifth wave in bigger C to complete a possible Flat correction. The internal count for the fifth wave shows the completion of the first two waves and we currently wait for wave three, which is usually the longest among the five waves within an impulsive wave, which is why we expect a decline this month. In case this is the last wave in an ending diagonal, we may witness high volatility, yet this will not alter our expectations for a decline, as far as 1.0930 is intact.
From here we expect a decline this month, as far as 1.0930 is intact; whereas as far as 1.0730 remains unbroken, the short term trend is to the downside and the 1.0660 will keep the decline valid on all timeframes. The pair is targeting the 76.4% correction at 1.0265.
Support 1.0565 1.0465 1.0380 1.0265 1.0130
Resistance 1.0660 1.0730 1.0850 1.0930 1.1025
Recommendation Based on the charts and explanations above, our opinion is selling the pair from 1.0660 to 1.0265 and stop loss above 1.0930 might be appropriate.
As we see in the above image; the bearish wave with a key resistance at the 50 day MA at 1.1070 resulted in the pair forming a bearish candlestick formation supported by the stochastic indicator adjusting to the downside, as it attempts to exit an overbought area, whereas the RSI follows. The minor support at 1.0755 must be breached to confirm the decline that will take the pair to the key support currently at 1.0525.
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The second image on the weekly charts shows the pair had closed below the 100 MA at 1.0960, after reversing from the key resistance for the downside channel that was discussed earlier. From here we see the pair is to target the 61.8% expansion at 1.0305, as far as 1.1025 remains intact.
From here we expect a decline on the intraday, short and medium term yet could be quite volatile on the intraday basis, due to some positive signals on momentum indicators. However, trading below 1.1070 will keep the trend to the downside. Note that the pivot point is the 50 week MA at 1.1300, where any trading below it will result in a decline.
Support 1.0715 1.0635 1.0525 1.0305 1.0245
Resistance 1.0960 1.1070 1.1150 1.1265 1.1300
Recommendation Based on the charts and explanations above, our opinion is selling the pair from 1.0900 to 1.0525 and stop loss above 1.1150 might be appropriate.
