MARKET COMMENTARY
TECHNICAL OUTLOOK (Based upon weekly charts)
EUR/USD Weekly
A very large bearish candle emerged this week as the EUR/USD began trading close to the week’s highs (1.2293/1.2350), and then collapsed to lows of (1.1964) before finally closing at (1.2018). Very interesting levels: The week’s high rests near the 38.2% fibs (1.2330) drawn from 1.1373-1.2927, as the week’s lows reside close to the 61.8% fibs (1.1950) drawn from the same parameters. In addition, our moving averages further confirm the underlying weakness, as the 40-week EMA trends below the SMA (1.1998/1.2123). As the fourth week approaches between the 1.1950-1.2350 levels, it appears a channel may exist, until a break out/ break down can be sustained with conviction. Bulls should note the ever increasing slow stochastic is charging higher.
USD/JPY Weekly
This week’s trading session formed a ‘bearish hammer’ sending many bulls to run for cover. Trading opened close to the high of the week (110.93/110.99) and then proceeded to sell off below the weekly 40 EMA (110.42), briefly crossing below the weekly 40 SMA (108.82), and finally closing (110.03) exactly on the 38.2% fibs drawn from 120.67-103.42. As the weekly 55 EMA trades nearly at par with the 55 SMA (111.46/111.39), this Fibonacci level may appear to act as support for the time being. A break and close below the 110.00 figure may encourage shorts to drive us down to retest the 50% fibs (109.00) drawn from 103.42-114.85. Notice the MACD, which appears to be losing upward momentum as well. On the other hand, if we can hold the 110 figure, long side traders may target the recent 114.00 area.
GBP/USD Weekly
This week’s session brought a bearish engulfing candle on to our screen. The week opened (1.8408) and quickly turned south to a low of (1.8158) before finally settling 1.8193. Notice our weekly highs as well as the previous week’s highs (1.8484) failed to penetrate the 61.8% fibs drawn from 1.9140-1.7450. The 1.8500 level now stands at significant resistance, and may attract more sellers to this area. The weekly 40 EMA crossed below the SMA (1.7695/1.7736), as the longer-term weekly 55’s remain in a positive trend (EMA-1.7437/SMA-1.7316). Support bids may step up at the fibs drawn from 1.7450-1.8484 as follows (38.2%-1.8060, 50%-1.7960, 61.8%-1.7825). Finally, traders may also take note from the MACD. If the histogram can continue to register higher values than the previous week, this may be the hint bulls are waiting for.
USD/CHF Weekly
Bulls enjoyed a fantastic engulfing candle this week, as bids stepped up to a high of 1.2612, before finally settling in at 1.2583. As the 40-week EMA trades above the SMA (1.2911/1.2834), the 55-week EMA/SMA has followed suit (1.3075/1.3043). Sellers may awaken at the 38.2% fibs drawn from 1.3226-1.2320. However, supporting buyers may lurk at the weeks lows (1.2320), as a break and close below this level may invite a new wave of shorts to the table. Notably, our RSI couldn’t return to the upside, and break the par level. This may be a clue to underlying weakness in the trend.
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