Forex Trader’s Weekly Update 0601

Forex Trader’s Weekly Update (June 1 2009 to June 5 2009) by Daniel Su

EUR/USD

EUR/USD’s rally extended further to as high as 1.4167 last week, meeting mentioned target of 100% projection of 1.2456 to 1.3737 from 1.2884 at 1.4165. There is no sign of topping yet and initial bias remains on the upside this week. Further rally could be seen to trend line resistance at 1.4449 next. On the downside, below 1.4064 will turn intraday outlook neutral and bring pull back. But short term outlook will remain bullish as long as 1.3793 support holds.

In the bigger picture, there is no change in the view that the rise from 1.2456 is the third leg of medium term consolidation that started at 1.2329. Such consolidation is probably developing into a triangle pattern. Having said that, upside of the current rise from 1.2456 should conclude between 100% projection of 1.2456 to 1.3737 from 1.2884 at 1.4165 and 138.2% projection at 1.4654. Focus starts to be on reversal signal as EUR/USD now enters into this resistance zone. Break of 1.3793 support will be the first signal that EUR/USD has topped out and will turn focus to 1.2884 support for confirmation.

In the long term picture, outlook is rather unclear for the moment. While 1.6039 is no doubt an important long term top, there is no clear answer on whether subsequent price actions from 1.6039 are unfolding as sideway consolidation, deep correction, or a reversal in trend. Nevertheless, note that another fall is still in favor as long as 1.4867 resistance holds and in such case, EUR/USD should at least have a test of 1.1639 long term support.

Pips Mover’s Weekly Pivot Point for this week: 1.4042

Historical Levels up to date: 1.4865, 1.4675, 1.4420, 1..4090

From my Weekly chart, the pair is on a major down-trend as indicated by the three moving average lines and the Long MACD. This week, the pair is bearish as it falls to below the support at 50.0% Fib Level but manages  to rebound above it. It remains below the 1.4000 level and above the rising red channel which indicates that it is in the process of undergoing a bullish reversal. The Stochastic has risen to 87%.

GBP/USD

GBP/USD’s rally extended further to as high as 1.6196 last week, taking out mentioned resistance of 1.6045/50 (38.2% retracement of 2.0158 to 1.3503 at 1.6045 and 161.8% projection of 1.3503 to 1.4984 from 1.3654 at 1.6050). 55 Weeks EMA (now at 1.6242) is in proximity but there is no signal that GBP/USD is losing momentum yet. Short term outlook remains bullish as long as 1.5848 support holds. Further rise might be seen to 38.2% retracement of 2.1161 to 1.3503 at 1.6428 next. On the downside, below 1.5848 will indicate that a short term top is likely formed and will bring decline to test trend line support (now at 1.5061.)

In the bigger picture, GBP/USD’s rally is admittedly much stronger than expected but there is no change in the view that rise from 1.3503 is corrective in nature. Though, it might be correcting the whole fall from 2.1161 rather than that from 2.0158. Having said that, current rise might extend further into resistance zone of 38.2% retracement of 2.1161 to 1.3503 at 1.6428 and 50% retracement at 1.7332 before completion. Nevertheless, focus will remain on reversal signal as the rally continues. Break of the mentioned near term trend line support (now at 1.5061) will suggest that the rise from 1.3503 has finally completed and should turn outlook bearish for a retest of this low.

In the longer term picture, as discussed before, the corrective nature of the multi-decade advance from 1.0463 to 2.1161 as well as the impulsive nature of the fall from there suggests that GBP/USD is now in an initial stage of a long term down trend. Current rebound from 1.3503 is treated as a correction in the larger down trend only, rather than the start of a new up trend. Hence, the long term down trend is still expected to resuming after completing such correction. However, sustained break of 50% retracement of 2.1161 to 1.3503 at 1.7332 will argue that the long term trend in GBP/USD is indeed already changed and we’ll reassess the bullish potential in that case.

Pips Mover’s Weekly Pivot Point for this week: 1.6081

Historical Levels up to date: 1.9445, 1.8490, 1.7520

From my Weekly chart, the pair is on a major down-trend as indicated by the three moving average lines and the Long MACD. This week, the pair is bullish as it manages to remain above the support at 1.5880 but in a narrow range. It is trending above the rising red channel which indicates that it is in the process of undergoing a bullish reversal. The Stochastic has risen to 91%.


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5 Comments

  1. June 1, 2009 at 3:44 am

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  2. June 1, 2009 at 3:45 am

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  3. June 1, 2009 at 4:25 am

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  4. June 1, 2009 at 5:17 am

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  5. June 1, 2009 at 7:55 am

    […] Original post by yahookid […]


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