Currency Technical Report
EUR/USD
Resistance : 1,3445-55/ 1,3520-30/ 1,3560/ 1,3610-20/ 1,3670
Support : 1,3350/ 1,3300/ 1,3260/ 1,3230/ 1,3150/ 1,3050
Comment: Euro's weakness is back, as traders' concern about the effectiveness of the governments to limit the financial crisis, leads to the dollar's rise and the stock market's decline.
The ranges we had set for the trend reversal (1,3770-00) were not breached and the downward break of the support levels at 1,3480-00 ended the upward expectations that were raised in the beginning of the week. As long as euro remains below 1,3530, first possible target is found at 1,3300 or previous lows. A clear break of previous lows will bring next long term support levels at 1,2870-2950 area back in the game.
In case of a move above 1,3530-40, next targets are found at 1,3610-20, but such a move would indicate the formation of a consolidation, canceling the immediate resumption of the decline.
STRATEGY
Buy : Buy opportunities emerge at 1,3300-10 area, where previous lows were formed. We should keep positions small with tight stops and targets, until we see a reversal sign, as the trend remains bearish…
Sell : The short term trend is bearish and we will follow it. Sell positions could be tried at 1,3450-70 adding more at 1,3530-40, with stops above 1,3555 and target at 1,3300-10. Sell orders could also be tried 1,3600-20 with stops above 1,3655 and target at 1,3540.
In the monthly chart of EUR/USD you can see prices from 1980 (weighted prices). In this chart you can see the cycles we had also mentioned in previous analysis. We have recognized a basic 4 year cycle (from low to low), and wider cycles for 8 and 16 years are also clear in the chart. We can see that dollar completed the first upward and downward cycle from 1985 lows to 2001 lows, while next cycle began from 2001 lows.
The move from 1985 lows to 1991 tops is similar to the move from 2001 lows to 2008 tops. (in green color at the chart)
We must also mention that the decline of 1991 is similar to the evolving move from this summer (in cycle at the chart)
The rise of 1985-1991 is equal in pips ( with small deviation) with the rise of 2001-2008, indicating the complete symmetry. Is history repeated? Maybe. The decline of 1991 was a little bit lower than the 38,2% retracement level of the previous rise.
So, if we extend the distance from the decline of 1991 to the top of 1,6040, our target would be approximately at 1,2950 area. The 38,2% retracement level of the decline is found at 1,3050 area.
We should wait for the confirmation of the move symmetry in the decline. A possible decline to those levels(1,3050-2950) will find us bullish, with great upward expectations.
Watch the reaction that followed the sharp decline of 1991. Dollar formed new lows. Of course, this doesn't mean that such a reaction is expected now, we are just wondering…could next target possibly be at 1,7000 area ?
GBP/USD
Resistance:1,7350/ 1,7390/ 1,7430/ 1,7480/ 1,7520-30
Support : 1,7130/ 1,7090/ 1,7030/ 1,6980/ 1,6930
Comment: The pound could not breach the resistance levels we had mentioned, and the move below 1,7480 activated the negative scenario. The formation of a double bottom or a move until 1,7000 seems as the most possible scenario, as long as reactions remain below 1,7380-00.
STRATEGY :
Buy : Buy opportunities emerge at 1,7100-10, with stops below 1,7070 and targets are set at 1,7250-60. Next levels for sell positions are found at 1,6850-60 area…
Sell : The trend is bearish and we will follow it until the reversal. We will try sell positions in the reactions towards 1,7350 and 1,7390-00, with stops above 1,7440 and targets at 1,7150. Sell orders could also be tried in a clear break of 1,7090, with target at 1,7000 or 1,6930-50 area and stops above 1,7140…
USDJPY
USDCHF
FX Greece
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