Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. CMS will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analyses.
Foreign currency trading is not conducted on an exchange. CMS is acting as a counterparty to its clients’ transactions and as a result, CMS’ interests may be in conflict with its clients. Since CMS acts as the buyer or seller in the transaction one should carefully evaluate any trade recommendation provided by CMS or any of its solicitors. Foreign currency trading involves a substantial risk of loss and may not be suitable for all investors.
All screenshots are made from VT Trader 2.0 and are of actual market data at the time of the screenshot.
Markets Stay Ranges
This week, the market continued to be stuck in ranges. The risk appetite to start eventually fizzled. Essentially the bulls are just as aggressive as the bears when you are above the intra day noise. These short-/medium-term ranges require aggressive trading styles and very close monitoring. The conservative approach is to wait for a breakout from clearly established ranges.
EUR/USD 1.4800 Retested
- Daily and 4H: The week started with the pair surging to towards the previous high at the 1.50-1.51 area. However, the rally stalled there, and the pair dropped later in the week and in effect completes a reversal candlestick combination.
- In the 4H timeframe, we see that the 1.4800 to 1.4850 area is an important support, which the market is testing right now. At the beginning of the week, we anticipated the drop to 1.4800 as a kickback. (Refer to Daily Technical Update 11.09.09 EUR/USD). However, the speed of the decline raises caution, especially as the daily timeframe shows reversal price action.
- The underlying conditions are a neutral, as the market is still stuck in range between 1.4800 and 1.5050. A rally from 1.4800 therefore should have a conservative target at 1.5050.
- A break below 1.4800, which would also break an upsloping support could spell retest of 1.4600.
- The medium-term range is therefore between 1.4600 and the 1.5050.
GBP/USD Choppy Week
- Daily and 4H: At the end of the week, the daily timeframe shows bearish divergence, and a reversal candlestick combination at an important resistance. Although this resistance was briefly broken, it is now looking like clear-out action – a strong convergence of bearish signals.
- The market started the week at 1.6600 and shot to 1.6800, but reversed back below where it started down to 1.6500.
- On Wednesday, there was a retest of 1.6600 this time as resistance and it held, signaling bearish takeover in the short-term.
- However, Thursday’s European session pushed the pair back up above 1.6600 again only to be stopped this time at 1.6700.
- So we had a very choppy week that started bullish, but ended slightly bearish.
- What we established is a short-term range between 1.6500 and 1.6800, which is the upper part of the medium-term range between 1.6800 and 1.6250.
EUR/GBP Falling from Resistance to Support
- Daily and 4H: The market is keeping the EUR/GBP in range, although higher timeframe analysis suggests slight bearish bias in the medium-term, although stochastic shows oversold conditions, so a shor-term bullish attempt may be anticipated.
- In the 4H timeframe it is very clear that the pair is ranging between 0.9050 and 0.8950.
USD/JPY Breakout Stalled
- 4H: The market started the week with a false breakout of the short-term support at 89.60. It then had a false breakout of the resistance at 90.20 as well as an important resistance at 90.40. (Refer to Daily Technical Update 11.12.2009 USD/JPY). It ends the week returning to 89.60.
- The established short-term range is 89.00 and 90.40 or more conservatively 91.00. A break of 91.00 may spell a retest of 94.00, with first resistance at 92.30.
- A break below tests long-term support at 87.00-88.00.
NZD/USD Bullish Scenario
- Daily and 4H: The Kiwi-Dollar is following our second scenario that we established on Thrusday. Refer to Daily Technical Update 11.12.2009 NZD/USD). The support at the beginning of the week held, and the market is heading to retest its previous high and possbility develop a second upswing.
- If this second upswing materializes, we have an interesting test of the previous high (2009 high). There is a lot of resistance here, so it will be interesting to see if there is enought bullish strength or whether the market will push the pair back in range.
- The medium-term range is between 0.7650 and 0.7080, while the short-term range is between 0.7450 and 0.7300.
USD/CAD In Declining Channel
- 4H: The market is declining from the 1.0870 area as we anticipated earlier in the week. (Refer to latest: Daily Technical Update 11.12.2009 USD/CAD).
- The decline that started the week breaking below 1.0600 is sustaining since a rally attempt was stopped below this powerline.
- The market can slide to 1.0220, but will see support at the 1.3500-1.3600 area first.