Weekly Report 08/08 -12/ 08/ 2011

The aggressive recovery from 76.25 zones took the pair towards our second suggested technical target at 76.4% Fibonacci retracement of CD leg for the harmonic structure discussed in the previous report. Now, we will look at the daily chart from a pure classical point of view, where we can realize why the upside recovery stopped around 80.00 zones. In fact, SMA 50 played a big role in sending the pair lower, particularly after drawing the long wick of past Thursday's candlestick. Additionally, Fibonacci of 38.2% for the downside rally from 85.50 to 76.25 has met the solid classical resistance-previous broken support- of 79.55. Anyway, AROON indicator shows how strongwas the reversal from 76.25 and it may continue over coming period. But, areas of 78.45 should be penetrated as well to bring upside resumption, while 76.25 should be the floor that protects the pair form more slides.

The trading range for this week is among key support at 75.25 and key resistance now at 81.05.

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

Previous Report

RecommendationBased on the charts and explanations above our opinion is, buying the pair above 78.45 targeting 81.50 and stop loss below 76.80 might be appropriate.