Week of the Yen
While the Greenback was the strong performer of last week, the Japanese yen took that title for this week. Although we did see a general gain in the USD, it was no match for the JPY which was boosted from this week’s risk aversion.
- Update: The EUR/USD rallied above 1.36 following this morning’s outlook for a decline towards 1.3450. However, this push should not be considered an indication of bullish reversal, but rather within the context of the general decline. Unless, the market can create a low above 1.3650, continue the bearish outlook.
GBP/USD: Continuing Bearish Push
- Daily: The bearish outlook for GBP/USD is materializing since last week’s post. The target is 1.50, but now let’s refine it a little. The 1.49 area is a full projection of the previous swing from 1.65.
- This is also 61.8% retracement of the 2009 rally.
- Weekly: The weekly shows that the 61.8% retracement is coincident with a 150% expansion of the previous downswing from 1.69. Look for some bottoming action here next week.
- Note that if the market continues to decline, the next target is 1.44, which is about 200% expansion of previous swing from 1.69 and also 78.6% retracement of the 2009 rally.
USD/CAD: Rally Pauses at 78.6% Retracement Level
- Daily: The daily shows this week’s rally as anticipated last week. The market indeed held above 1.0350 and rallied, but was paused at the 78.6% retracement level.
- The stochastic shows some promise as it crossed over to the upside this week.
- The 100% swing projection goes to the 1.09 area. However, if this is a new bullish mode, the swing can continue to the 1.1150 area. This is the next strong cluster of fibonacci levels.
- Weekly: The stochastic in weekly is still bearish, BUT is showing some advancing bullish momentum in the market.
- You can also see congestion since end of 2009. But since we are coming off a decline, the bullish outlook in the Daily time-frame needs confirmation.
- A break above 1.08, and establishing a low above that would be very promising for the bullish outlook towards 1.115 and possible another leg up after a correction there.
EUR/GBP Rally Brings Pair to Crossroads
- Daily: The EUR/GBP followed our outlook from last week’s update. However, it is stronger than expected, and no topping action occurred at the 0.89 area. Instead the market had no trouble penetrating this 61.8% retracement level, and continued to 78.6% retracement level (0.8970).
- This is also a 150% expanded projection of the previous swing. The light gray fibonacci levels are for the decline that started at 0.9420 area (see in weekly).
- Weekly: The weekly chart shows that a rising support held and the current week’s price action suggests another bullish week to follow possibly to the 0.91 area.
- The stochastic is crossing over.Further confirmation can come next week if there is a correction decline and a bottom is established above 0.8850.
- This short-term bullish outlook can turn into intermediate term if 0.91 breaks.
GBP/JPY: Weakest Yen-cross Relative to EUR, USD, CAD, AUD (video update)
Fan Yang
Currency Analyst
Commodity Trading Advisor
fyang@fxtimes.com
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