Weekly analysis and trade recommendation
Posted on March 3, 2013 by — No Comments ↓
Weekly analysis and trade recommendations
Medium: Buy the EURUSD at 1.2985, SL 1.2945, targets 1.3050, 1.310.
Risky: Buy the EURUSD at 1.3020, SL 1.2950, targets 1.3050, 1.310.
Risky: Short the GBPUSD at 1.5250, SL 1.5350, targets 1.50, 1.48, 1.43.
Our risky trade recommendation of last week in the EURUSD currency failed at a few pips close. The EURUSD went as low as 1.296 before it ended the week just a bit above 1.30. This bearishness on the EURUSD was mostly due to the negative sentiment generated by the Italian elections. It is unclear yet if these elections will have an impact on the fundamentals, but tail risks are being awakened. For now the bond market does not show any panic. As shown on the daily chart of EURUSD, the 150 day moving average has played a key role for this currency pair during the last year or so. The daily chart shows several spots were the 150 DMA served as a resistance or a support, the last being on Friday. The 150 DMA also served as a resistance during the spike in October 2011 (not shown on the chart). The 4H chart also suggests that are rather close to the lower edge of its down trending channel. All of this makes us think that the EURUSD is now psychologically oversold and will need to correct a bit. We expect the week to start with a rebound of EURUSD to at least 1.31x, possibly up to as high as 1.33x if something positive comes out of Italy. However, the long term view on this currency pair is now fuzzy. And should we fall below the 150 DMA, then 1.25 could easily be in range.
Last week, the USDJPY continued to stagnate in the 92-94 range in a typical saturation pattern. The newly formed doji on the weekly chart increases the uncertainty, and suggests we might stay in the 91-95 for some time to come. This means one can trade the edges of this range, but we do not recommend.
The GBPUSD has collapsed as we announced and there is still a lot of downside available (down to 1.42). One possible trade idea is to look for the“buyer remorse”: entering short on a retest of the horizontal support line around 1.52-1.53.
EURUSD Daily Chart
EURUSD 4H chart
GBPUSD Weekly chart