Weekly Report (May 09-13, 2011)

The pair is stable below the breached neckline for the bearish pattern mentioned previously, signaling the extension of the downside correction that might drive the pair to the main ascending channel's support at 1.6210. At the same time, this downside move is a normal reaction for approaching the channel's resistance and accordingly the reversal is ideal for price channel's trading as it pressured momentum indictors now into oversold areas. We need to observe the pair closely when reaching the mentioned support as the upside reversal is possible to continue trading within the channel. Breaching areas of 1.6210 will extend the downside move, while breaching 1.6525 will be the first signal for the pair's recovery.

The trading range for this week is among the major support at 1.6130 and the major resistance at 1.6720.

The short term trend is to the upside with steady daily closing above 1.5315 with targets at 1.7000.

RecommendationBased on the charts and explanations above our opinion is selling the pair around 1.6455 targeting 1.6210 and stop loss above 1.6575 might be appropriate this week