Forex Technical Update June 21, 2010  EUR/USD is in Resistance Zone

  • Daily: The USD/CHF pair has been in a very persistent decline for 2 weeks, dropping from 1.17 to 1.10 (700 pips). This decline was anticipated, as a wave iv, but I also entertained that we could have ended an extended v. In any case, the decline was projected to 1.1250 then to 1.11/1.10. The market did not really stop at 1.1250, and went straight to 1.10, where it now finds a bit of support.
  • The above scenario in the daily chart is very premature, but shows a sharp reversal to the bullish impulse wave. The equality of wave v to wave i, would suggest a projection to 1.2.
  • This however should be reconsidered if the market breaks below 1.09 because that would violate an Elliott Wave principle if this is wave iv.
  • In any case, let's take a look at this current rally ats a pullback because I suspect there is one more downswing.

  • 4H and 1H: The 4H chart shows an open gap downwards, and shortly after, the gap being filled. Momentum has been very bearish, but is resolving the oversold condition. The 1H chart RSI shows that momentum in the near-term has resolved the oversold condition and may be ready to continue the down trend.
  • The 1H chart RSI also shows a negative reversal emerging, unless it breaks above 60 significantly. If it does, I would suspect a longer period of sideways consolidation, and maybe even a reversal back to the uptrend.
  • However, the current technical condition is still bearish. The bullish scenario to 1.2 is displayed ONLY as a premature outlook. The chances improve if the 1H RSI breaks above 60, and can get into the overbought zone.
  • Before that, another decline might bring the pair closer to 1.09 before the USD/CHF market can muster a significant rally.

  Fan Yang Currency Analyst Commodity Trading Advisor

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