Daily Forex Technical View – January 16, 2008

EUR/USD Technical View

Euro formed a bearish outside bar on Tuesday, price action very volatile with the pair moving higher early in the trading day and after just taking out Mondays high for a couple of points it fell straight down closing the day around the 1.4800 level. We mentioned yesterday that if the EurUsd formed a toppish pattern around the yearly high would give bears a new opportunity to short, well the pattern formed and although we failed to retest the November 2007 highs there are signs new shorts have entered the marked, especially after yesterday’s downside momentum. A push decisively below 1.4800 will reinforce the short term bearish sentiment and will more than likely bring the pair lower toward last weeks low at 1.4640/50 support area. Conversely lack of strength on the bears part will keep the pair trading around these levels until we get some news that will force it to retest the 1.4930 intermediary resistance.
Resistance Levels

• 1.5000– round number
• 1.4966- Nov 23rd high
• 1.4735 –Nov 9th High

Support Levels

• 1.4500- round number
• 1.4300 – Sept 30th High
• 1.4000 – Round number
• 1.3850 – July 24th High

GbpUsd Technical View

GbpUsd is trading at the exact same level as it was when our previous commentary was written even though we had a 200 points move yesterday; the pair just pushed higher until it run out of steam close to the December low at 1.9750 and after that it fell right back to where the move started. The resistance at 1.9750 is strong, there we have the December 24 swing low, the middle of the small consolidation range at the start of January and a down sloping trendline connecting the December 12th and 31st swing highs. Although it broke to the upside the smaller triangle on intraday timeframes cable has failed at conserving the bullish momentum and is now very close to the lower part of the triangle and we might see a push south below the 1.95550 support with the first target being the 1.9480 January 11th low.

Resistance Levels

• 2.1148 – Nov 9th High
• 2.1065 – Nov 7th High
• 2.0650 – July 24th High

• 2.0365 – September 12th High

Support Levels

• 2.0000 – Round number
• 1.9800 – Round Number
• 1.9670 – August 17th Low
• 1.9180