Best Financial Markets Analysis Article The downmove in 2009 culminated in an acceleration in November, below prior 87.11 Dec-08/Jan-09 lows, which seemed to justify a bearish stance. However, an equally rapid recovery led us to think that we might have seen a blow-off move, and subsequent action supports this view – s/term weakness may not, therefore, be long-lasting.

The FX Trader’s view

MONTHLY CHART:

In the FX Specialist Guide we have started to look at a positive divergence on the monthly RSI indicator now visible – the implication is that long term bear enthusiasm is on the wane.

WEEKLY CHART:

The break below the 87.11 lows was deceptive – but such false breaks can be turned to advantage.

Note that key long term falling resistance is currently around 93.80, and a decent Weekly close above this would provide a further bull signal.

DAILY CHART:

The break above the 90.76 04-Dec high and bear channel top projection supported our thinking that bears had enjoyed a blow-off finale in Nov.

S/term resistance around the 50% recovery level has been seen, but we view s/term weakness as probably temporary ahead of another bull attempt.

First support from that 90.76 high has come under pressure today – below this note in particular the 88.23/87.96 support area, 61.8% pullback and Oct low.

It is unclear if losses can extend to the lower 86.92 76.4% level.

A subsequent break above the 93.76 08-Jan high (and, therefore, above long term falling resistance on the Weekly chart) would next turn our focus on the 95.10/50 area, 61.8% recovery and Fibo projection.

Philip Allwright
Mark Sturdy

Seven Days Ahead
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Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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