Weekly Report 18/07 -22/ 07/ 2011

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It seems that the pair has finished the descending triangle construction as seen on the provided daily graph. Actually, there is a technical obstacle that prevents the pair from reaching the scientific technical target of the classical shape at 77.10 zones. This obstacle resides around 78.55-78.65 zones which represent cluster support, consisting of 76.4% retracement of the rally from 76.40 to 85.50 and 23.6% Fibonacci of the bearish wave from 85.90 to the aforesaid trough. In the interim, RSI 14 reflects clear oversold case and it may send the pair mildly upwards to retest the broken support of the classical pattern before resuming the bearishness towards 77.10 supported by stability below Ribbons lines -EMA 10 to 80- and the negativity on Vortex indicator -trend indicator-. Note that breaching through 80.90 zones will clarify that the bearishness is limited around the initial support of 78.50.

The trading range for this week is among key support at 76.40 and key resistance now at 82.30.

The general trend over short term basis is to the upsidetargeting 87.45 as far as areas of 76.40 remain intact.

Previous Report

RecommendationBased on the charts and explanations above our opinion is, selling the pair around 79.55 targeting 77.30 and stop loss above 81.00 might be appropriate.