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Weekly Forex Update: EUR/USD |
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Tuesday, 16 March 2010 15:45 |
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On the daily chart, the EUR/USD has broken lower through a Falling Wedge pattern and prices have settled within Autochartist’s Forecast range between the 1.3724 and 1.3531 levels. The break lower was triggered as prices traded through support at 1.3850; this pattern break is, in fact, a continuation, as it followed in the direction of the prior trend (e.g., down).
The limited follow-through reflects the strong support waiting just above 1.3400. The EUR/USD has since seen a slight push higher, with prices now trading above the Forecast range and testing resistance at 1.3800. (We know that considerable resistance will be found at 1.3800 because the March 12th session saw a previous push higher rejected at this level.) Autochartist’s low Initial Trend reading of two bars suggests the sideways market that recently formed is, in fact, an accumulation market cycle. Should prices break out higher, follow-through is more likely if prices can rally through 1.3800.
This move higher on the daily chart can also be seen as a Channel Down reversal. (A reversal occurs when prices pierce the support of an uptrend, or – as in this case – the resistance of a downtrend.) This Channel Down reversal triggered with a very low Initial Trend reading of only two bars, meaning that the market cycle is more sideways than downtrending. Such a transition from a downtrend to a sideways market can cause a trend break (and subsequent reversal), but here it lacks momentum. When a trend is broken without momentum, there is little expectation of follow-through. The EUR/USD must here find buying support above 1.3800 if the rally through the downtrend line is to continue higher. Both patterns reflect a two-month trend – neither a short- nor long-term look, but significant enough to generate follow-through should prices break key support or resistance levels. The breakdown on the Falling Wedge could not overcome support at the 1.3400 level to continue lower, and this Channel Down pattern must find a way to break through resistance at 1.3800 if the next leg in the EUR/USD is to move higher.
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Weekly Forex Update: EUR/USD |
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Tuesday, 09 March 2010 11:07 |
The EUR/USD has established an intraday range as prices have bottomed at 1.3433. The top of the range on the 240- minute chart can be seen at the downtrend line (in green) of the Triangle pattern, just above the key 1.3700 price. The two highs to watch in regards to near-term resistance are 1.3736 and 1.3790. Currently, the EUR/USD is testing 1.3700, and has yet to successfully move higher through this major psychological level.
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USD/JPY Breakdown Targets |
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Wednesday, 03 March 2010 15:41 |
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The USD/JPY has broken lower through the support of the symmetrical triangle pattern on the daily chart. As prices have pierced the uptrend line support at 89.80, the shift from neutral or non-trending to a bearish downtrend has been completed for the near term. The follow-through that would be expected from such a momentum breakdown relies on sellers pushing lower through key support levels. Looking to intraday charts to identify these levels leads to the initial, and most significant, near-term support to watch.
Note the trend that preceded the sideways accumulation market cycles was down as prices traded lower from the 101.45 high of April 7th, 2009. The subsequent lower highs at 99.77, 98.89, 97.11, 93.78, and, most recently, 91.91 show sellers' willingness to short at the upside corrections. It also clearly demarcates the upside resistance buyers will need to overcome in order to rally the market in the future.
Since the preceding trend was down, this breakdown is a continuation pattern as prices shifted from markdown to accumulation and now, potentially, to markdown once again. Whether prices can fully transition to a downtrending market cycle will depend on how buyers react at the all-important 89.00 - a major psychological level. From a technical standpoint, the breakdown was the more likely scenario since the Initial Trend reading was very high on the pattern alert. This high reading suggested that that the downtrend was still the dominant psychology of the market and its influence would point to a continuation.
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Wednesday, 24 February 2010 16:42 |
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The 60 minute GBP/USD continuation triangle (1) shows price movement converging between 1.5540 resistance (R) and 1.5390 support (S). The question is, how soon will prices climb back to (R) after yesterday's downwards plunge?
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Wednesday, 17 February 2010 15:40 |
(1) is a relatively long channel down pattern in the EUR/CAD 60 minute time frame containing 179 candles. It began two Fridays ago at 1.4616 support (W) and has since progressed in the direction of the 1.4316 resistance level (V) as can be seen to the right of the pattern. To help calculate where the price could go from here in the near future we are taking some pointers from the prediction areas in (2) and (3).
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