For December 7th 2009

For December 7th 2009

Questions and suggestions? Contact me at [email protected] Any information contained in this document are based on or derived from information generally available to the public from sources believed to be reliable. There’s no representation or warranty is made or implied that it is accurate or complete. Any opinions expressed are subject to change without notice. This post has been prepared solely for information purposes and does not constitute any solicitation to buy or sell any instrument, or to engage in any trading strategy. Charts were generated using Alpari UK’s MetaTrader 4.0

EURUSD

Euro fell on Friday, as expected. It hit 1.4821 and settled the week at 1.4857, outside the rising price channel. With the pair now ‘kicked out’ off the price channel, it is evident that the bias is now down. First support will be the congestion level at 1.4800, and then the pivotal 1.4625. Steep drop on Friday may trigger a modest corrective rally early this week. Retracement levels are seen at 1.4896, 1.4943, 1.4980, 1.5018, and 1.5064. The magnitude of the fall suggests that retracement will be shallow, probably limited to 1.4943. Use corrective rallies as opportunities to enter SHORT, while maintaining stop above 1.4980. Set target at 1.4800 first, then 1.4625.

GBPUSD

Cable took a breather towards 1.6668 first before it fell to hit 1.6421, just below the expected target 1.6443. It is now clearly bearish and likely to resume its downward course this week towards 1.6376 and possibly even 1.6270. Since it fell towards 1.6443, the pair has reached its 23.6% retracement at 1.6479, and subsequent resistances are seen at 1.6514, 1.6544, 1.6574, and 1.6609. Just like EURUSD, the steep fall could mean shallow retracement, so look to enter SHORT at either 1.6479 or 1.6514 with stop set above 1.6544. Targets could be set at 1.6376 and 1.6270.

USDJPY

The rally took USDJPY past the weekly key resistance at 89.18 as it hit 90.76, just below the 38.2% retracement level at 91.11. While not setting and immediate turnaround, the rally is nearing the critical weekly high of 92.32. The risk is the bearish pressure will be out for now as the bulls take over the lead. The descending trendline has been broken as well, and this points at the next trendline near 93.80. Supports are seen at 90.11, 89.70, 89.37, and 89.04. Look to enter LONG at the first three, with stop set below 89.04. Upside targets are 91.11, 92.32, 93.08, and 93.80.