For October 26h 2009

For October 26h 2009

USDJPY

USDJPY continued to rally last week, clearing the 91.71 resistance on Thursday and now entering the resistance zone at 92.00-92.40. I expect the rise will not be as smooth as before because up to 92.87 we have resistances scattered all over. Still, the weekly and daily outlook remain bullish and it is likely that the pair is heading towards the descending weekly trendline at around 95.00.

Support at 90.00 remained intact last week and although not expecting the 91.71 resistance to give way that easily, the pair is now closing in towards the next key target at 92.87. I expect the support at 90.00 to hold major setback for now, while 91.20 will be the short-term support for early next week. Despite it powered towards a strong daily close, the hourly chart shows some exhaustion. This could lead to temporary setback towards mid-91.00s area. Still, the dip should serve as a new opportunity to go LONG for a test towards 92.87 and 94.03 next.

GBPUSD

Massively battered on Friday, cable had retreated back from 1.6692 peak to end the week at 1.6306. This diminished the upside potential for now. Cable is now the weakest currency compared to the likes of USD, JPY, CHF, EUR, CAD, and AUD. Next week may see deeper losses, although it could spring higher for correction first before it continues its descend.

Downside supports are seen at 1.6316, 1.6199, 1.6084 and 1.5941. Friday’s 394 pips decline could hold a potential for a corrective rally. With daily and weekly MACD started to curl back downwards, the focus is now reversed to the downside. Hourly chart showed exhaustion on the decline and suggests that corrective rally is nearby. It is however, unclear whether Asian markets will push it downwards first before the pair starts to go up. Nevertheless, selling into rallies will be the best strategy for GBPUSD next week. Downside objectives will be the aforementioned support levels.

EURUSD

Peaking at 1.5059 on Friday, EURUSD is now eyeing the upside objective at 1.5159. We also have a rising trendline on the weekly chart which has been holding the upside pretty well so far. Next week it will be at 1.5102 and whether the EURUSD will make a direct push towards 1.5159 or to have it in two-phase rally will remain to be seen. Weekly chart still shows no signs of weakness and the last week’s low at 1.4827 will be the key weekly support for now.

Zooming towards the daily chart, it is déjà vu all over again. Last week, Friday (16/10) ended with a bearish candle, the same also seen two weeks ago (9/10). Yet what happened afterwards was EURUSD marching higher on both subsequent Mondays. Since the weekly outlook remains bullish, I suppose the pair is likely to charge higher again next Monday. Downside will be supported by 1.4922, the first fibo support followed by 1.4838 and 1.4769. Apparently, 1.4838 is next to the prior high at 1.4842. The rising channel support is still lending support for now, and it will be somewhere around 1.4769 next week. If we look at the hourly chart, the outlook is somewhat bearish, pointing at possible dip towards 1.4922 before the pair rallies higher. There are two choices, first is to SHORT with risk set above 1.5059, targeting for 1.4922 or even 1.4838; second is to wait for the dip and going LONG with risk set below 1.4827 and aiming for 1.5159. 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 are obtained from Alpari UK