TECHNICAL ANALYSIS MAJOR US DOLLAR RATES - FEATURED MARKET – GBP/USD
GBP/USD extended losses from the November 2007 peak at 2.1158 (the highest level since the reversal from the November 1980 peak at 2.4546) to form a double bottom at 1.3500 / 1.3659 in January / March 2009. This set up a retracement of between 38.2% and 50% of the entire 2.1158-1.3500 decline, topping out at 1.7041 in August 2009, just under former key support at 1.7052, the November 2005 low. A deep retreat to 1.4234 in May 2010 briefly / slightly overshot the 76.4% retracement of the 1.3500-1.7041 recovery (at 1.4336), from where a renewed recovery phase commenced and has now lasted a full year, reaching a peak of 1.6745 so far. This is close to the centre of a potential 2 ½ year bull channel, and with the (red) 13 week
and (green) 52 week moving averages aligned and rising, accompanied by a potentially constructive MACD indicator, this bodes well for a continued recovery over coming months. However, a potential multi-week top pattern is being traced out and this could produce a setback towards former resistance / support at 1.5522 / 1.5708, where a higher low is ideally sought above last December’s one at 1.5346, to keep the overall recovery phase intact. 1.7041 is the next major overhead barrier above 1.6745, with a move through there likely to open the key 1.7329 level (50% retracement of 2.1158-1.3500), which in three to four months time will have coincided with the long-term (blue) 260 week (5 year) moving average (now at 1.7469).
FX
MAJOR TRENDS AND TARGETS FOR US DOLLAR MAJORS As at 14 June EUR/USD GBP/USD USD/JPY USD/CHF USD/CAD AUD/USD
Current level 1.445
1.6405 80.25
0.8385 0.974
1.0645
Major trend Up
Sideways Down Down Down Up
Major target 1.5144 & 1.6039
70.00 & 60.00 .8108 & .7005 .9061 & .7500
1.1460 & 1.2024
Trend change level 1.3428
1.4783 / 1.7041 85.53
1.0066 1.0854 0.9404
FX TRADER MAGAZINE July - September 2011
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