By Dino Zannoni
Today is the first post of a series of trading technical analysis will published friday evening on this site. On this articles we discuss about forex trading technical analysis in the forex market for the next week.
Friday Next Forex Trading Week
(chart source: Metastock)
The support of area of 1.29 has not been overcome downward yet, and EurUsd has now theoretically the chance to come back on the bullish road. An oversold indicator such as the RSI fell below 30 last week and it is quite easy to see on the chart what happened in the last two cases in 2012. If we consider that the bottom of 1.2965 on Thursday was close to the 200 days moving average, this rebound has a much more important meaning. In order to confirm the idea that the next few weeks should provide support to the Euro, we can also quote the fact that the correction stopped on the neck line of the previous bullish head and shoulder. As we can see from the Roc 1 yr, the resizing process of EurUsd is still in progress, but has just spent half of its way. When EurUsd experiences a fall lower than -10%, the recovery does not stop until the annual variation of EurUsd gets to +15%; as this model has been working since 1999, we want to keep on considering it as a reliable map to define strategies on the Dollar .
(Chart source: Bloomber and Metastock)
Even if the Swedish Krona is one of the mostly undervalued magnificent four currencies against the Euro (the others are Jpy, Usd and Gbp), there are lots of technical considerations that makes us suspect that the recent strengthening of the Sek against the Euro was too violent.
First of all, the seasonality issue. In March, EurSek rose in nine of the last ten years and this could lead at least to a corrective break. Then there is the key issue. As we can see from the graph, the EurSek trend ( here on reverse scale) is gaining a completely opposite tendency respect the Swedish exports trend. In other words, the excessive strength of the Sek is quickly deteriorating the export so that the latest data indicate a decrease of the export itself close to 2.3%. The daily chart of EurSek helps us in this subject: after a bullish sequence in 5 waves, we have now entered a corrective mode that might be running low on the 78.6% of retracement of the previous rise at 8.30. It will be necessary to wait for a price reversal pattern to enter short on Sek with a relatively low risk profile.
(Chart source: Bloomberg)
The bullish signal on EurGbp has just started, according to the technique of the Ichimoku cloud. The weekly chart shows how EurGbp has closed the week above the bands and the lagging line and trend indicators have all turned upward to confirm that the “cloud” now represents a medium term support. Even in 2010 asimilar attempt happened, but at that time the cloud had an inclination that denied the signal. Obviously 0.87 represents a critical resistance, and after its break there will be no more obstacles until 0.91, but at that point, the targets will be much higher.
We cannot also exclude some downward movement due to the strength of the reached overbought, but honestly we believe that before this correction EurGbp will have to test area 0.88 exacerbating the rise started at the beginning of the year that can now rely on the 8%.
We can also note that the same technical signal was triggered on GbpUsd where the Cable, after exceeding the psychological support of 1.50, should not find great resistances up to 1.42/1.43.
That’s it for today, have a good trading!