Forex weekly analysis: 18-10-2010

EUR/USD Daily graph: On middle –term, the pair is uptrend oriented. Following the break of last week’s resistance at 1.4031, the pair reached a new important resistance at 1.4170. Last session template may indicate a reversing trend but is not enough to confirm it. Since this is the first contact between the pair and the resistance, we suggest waiting 2-3 session in order to check whether the pair will base itself on the resistance or not. A too strong resistance should reverse the trend, creating an opportunity for a “Short” transaction. If you decide to enter the position, we suggest looking for a decreasing configuration on a one hour graph. Generally speaking, all the pairs having the USD as quote currency stoped their current trend. Anyway, be careful and do not enter any position unless you are sure of the orientation of the pair in question. GBP/USD Daily graph:
A second test of the resistance level of 1.6001 happened during the last trading session. This second test confirmed the strength of this resistance, suggesting a reversing trend. On daily graph, a falling star (10 pips breach of the last low occurred) should confirm the reversal. The probability for a reversal is stronger with this pair as opposed to the EUR/USD since the resistance was tested twice here. USD/CHF Daily graph:
The current sharp and clear decrease is lasting for already several weeks. The breach of last week support (0.9636) level put the pair at the lowest rate ever reached; meaning that he probability for the pair to keep its current trend is very high. A small reversal may happen, creating the opportunity for a “Long” but it will be limited to the last high occurred – 0.9636. Our opinion: We suggest waiting for the end of the correction, and following the current trend by trading “Short”. USD/JPY Monthly graph:
The current trend is clearly a decreasing one. A week and a half ago, the pair crossed the support 82.84 and its level is currently the lowest ever reached a long time ago. As we said about the USD/CHF pair, the probability for the pair to continue its decrease is very high. A “Long” trade is possible but limited to the last high reached, 82.84. Have a great week! Real forex team
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