Movers and Shakers (November 15 - November 20, 2009)

Different Consolidation Patterns

The EUR/USD and USD/JPY stuck to a short-term range, while the GBP/USD also stuck to its wider, but still short-term range. The USD/CAD and EUR/GBP and the NZD/USD are possibly developing retracement patterns after a breakout. The AUD/USD is still strong and may be completing a retracement pattern.
EUR/USD Stuck in Tight Range

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  • 4H: Nothing significant this week technically. As we mentioned last week, the EUR/USD was stuck in a range. The medium-term range roughly between 1.4600 and 1.5050. (Refer to Weekly Technical Update 11.13.2009).
  • Instead of oscillating between the entire range, the pair stayed above 1.4800, but couldn't reach 1.5050.
  • At the moment, the pair is developing a very short-term abcd pattern, so very short-term bullish move to start next week may follow.
  • The medium-term assessment remains similar to last week's; if the pair breaks below 1.4800, which may coincide with an important upsloping trendline, a decline to 1.4600 can be expected. The break of the trendline would not be significant because we already know the pair is consolidating, which is what that break would signal. However a bounce may confirm a rally, and add the possibility of breaking above 1.5050.
  • A break above 1.5050 is significant and spells continuation and an end to consolidation.

USD/JPY Congestion

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  • 4H: Last week, we noted that the USD/JPY has failed a rally attempt and a break below 89.00 would suggest further decline to test the 87.00-88.00 support zone. (Refer to Weekly Technical Update 11.13.2009)
  • So far this week, we started with a downside breakout, but the pair then remained in a tight range between 88.70 and 89.50. The 89.00 still acted as a powerline for the intra-day swings.
  • The market is holding the pair below 89.00, creating a tighter range to end the week between 88.70 and 89.00. Basically the market is struggling to close below 89.00 and therefore the break is unconvincing. Instead of greater volatility at the break, volatility dried up even more.
  • We will continue to stalk the pair next week, paying attention to resistnace at 89.50 and support at 88.70.

GBP/USD More Volatile but Remains in Range; Bearish Signal

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  • Daily and 4H: The GBP/USD also stayed mainly in range that was established last week between 1.6500 and 1.6850. (Refer to Weekly Technical Update 11.13.2009). The market ends the week testing the support 1.6500, in fact breaking it on Friday down to 1.6460.
  • The break is not confirmed yet, but the aggressive decline may be a bearish signal.
  • Looking at the weekly and daily we see that both are showing reversal candlestick combination at the resistance.
  • Looking Ahead

    USD/CAD and NZD/USD Retracement After Breakout

    • The USD/CAD showed a downside breakout but has been rallying back to the previous zone, and possibly setting up an abcd retracement pattern. (Refer to yesterday's Daily Tehnical Update 11.19.2009 USD/CAD).
    • The EUR/GBP broke below 0.8900, a bearish signal, but followed immediately with a rally back into the previous channel. This rally can be assessed as a retracement if it completes at around 0.9200. Refer to yesterday's Daily Technical Update 11.19.2009 EUR/GBP).
    • The NZD/USD showed continuation at first with a upside breakout, but also immediately reversed and is developing a possible abcd retracement pattern. (Refer to yesterday's Daily Technical Update 11.19.2009 NZD/USD).

    AUD/USD Still in Bullish Mode?

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    • Daily and 4H: The AUD/USD broke the 0.9300 area and reached 0.9400 this week, but could not close above. Instead the market rejected this breakout, which immediately turned to weakness. Still in the daily timeframe, we see that the market is still bullish, and is testing an inviolate trendline.
    • We observe in the 4H timeframe a completed hand and shoulders and the market following with a decline from the neckline of 0.9200. The pattern breakout minimum projection is 0.9000 which coincides with the 78.6% retracement area.
    • If the market supports the pair here, we are still in the bullish mode. However, if the market goes to 0.8900, and it holds, then we have confirmation that we are still in medium-term consolidation ranging from 0.8900 to 0.9400. A break below 0.8900 suggests we have topped a long AUD/USD rally.