Monday, February 09, 2004

Learn Forex Trading

Learn Forex Trading

Technical Outlook
EUR/USD’s close on Friday above triangle trendline resistance at 1.2640 turns the technical picture emphatically bullish and favors an imminent resumption of the primary bull trend. Oscillators further bolster the bullish picture following Friday’s positive cross on the MACD. The 1/23 1.2779 swing becomes the next major level of resistance, with a break above required to negate the bearish implications of the weekly bearish engulfing and prolong upside momentum. An interesting trading day in USD/JPY on Friday as the pair underwent a clear short squeeze on a move through the 10 and 20-day SMAs. The failure slightly below the 50-day SMA and tail reversal close below the open on the daily however highlights a clear lack of resolve among bulls and favors an eventual test of the psychologically important 105.00 handle. Despite this overwhelmingly bearish technical picture, we still require a sustained break below 105.00 to confirm the start of another meaningful leg lower. Similar story in Cable as in EUR/USD after Friday’s close above 1.8430 trendline resistance. A break above the 1/23 1.8526 high is needed to negate the weekly bearish pattern and put focus back on the 1.8581 decade high. The pair remains vulnerable to a typical breakout-retracement scenario in the near-term but as long as support at former trendline resistance holds the outlook remains strongly in Sterling’s favor. A break below trendline support and a negative MACD cross in USD/CHF sets up a potential bear flag breakdown on the daily. Our key downside pivot remains the 1.2472 swing low, with a break below required to open the way for a renewed assault on the 1.2277 multi-year low. Allow for some corrective price action intraday, but below the 1.2400 handle bears remain firmly in control.

Chart of the Day - USD/CAD
On 01/19 USDCAD had a high at 3050 (above our 2950/2990 zone). A small retracement then occurred from the high and ended on the 2852 low on 01/20, 198 pts lower. The buck kept its momentum before breaking the 3000/3100 level on 01/23, S was found on the same area a couple of days later (low at 3037 on 01/27) before finally failing on 3440 (slightly below 3460/3500 zone), 588pts higher. Today the outlook is neutral as we remain in a healthy ST uptrend while we test major R. In fact, 3460/3500 is still a perfect entry for reversal players thanks to a robust Fibo confluence (50% Fibo from the Jul - Jan bear wave & 50% Fibo from the 03 - 04 bear wave) and the current Swing high. After a sustained break above 3500, the area will become S and 3700 will be the next target. On the bullish side, aggressive players will step up the 3150/3180 zone thanks to the 20 EMA and 38.2% Fibo from the Jan - Feb bull wave. Conservative range player types will wait for the 1.2600/40 zone to exploit the swing low and Lower BB. A breakout there would put 2400 and 2120/80 into play.

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