2014.04.14 :Forex Technical Analysis: Easter approaches, bringing irregular movement
EUR/USD
Forex Technical Analysis: Last week the bulls scored a major victory and what appeared to be a break of support actually turned into a clear and strong bounce higher which took the pair close to the year�s high.
Technical Outlook
The trend line we mentioned last week, combined with the strength of 1.3710 support, generated an almost perfect bounce higher. The uptrend is intact and the bulls are in control of the market so we expect price to move higher, approaching or even breaking the year�s high located at 1.3965. Because price traveled a hefty distance in a single direction, we also expect bearish retracements before bulls can take price higher. The main levels to watch this week are 1.3965 as resistance and 1.3830 as support, followed by 1.3710; the trend line will also provide diagonal support if it�s touched again.
Fundamental Outlook
The week begins Monday with the release of an important US indicator in the form of Retail Sales. Being a major part of American consumer spending, sales made at a retail level can highly influence the pair�s direction and can strengthen the US Dollar if better numbers are posted. Tuesday the German ZEW Economic Sentiment is released, followed by the US Consumer Price Index which has inflationary implications and will probably be the day�s main event.
Wednesday it�s Euro Zone�s turn to release the Consumer Price Index. Its importance comes from the fact that ECB closely watches it when the Interest Rate decision is made, in an attempt to keep inflation between certain ranges (just below 2% is considered optimal).
The last event of the week is Thursday�s release of the Philly Fed Manufacturing Index which is a survey based on the opinions of about 250 manufacturers from the Philadelphia district. Friday most Banks will be closed in celebration of Good Friday so irregular movement and low liquidity will be present.
GBP/USD
The Pound strengthened significantly last week, on the back of positive economic data and this translated into a bullish rally above 1.6750 resistance.
Technical Outlook
The latest bullish move was stopped by the resistance located at 1.6820, a level which wasn�t visited by price since the year 2009. Now we can notice that a Double Top has formed; this chart pattern which is considered bearish is often seen at the end of an uptrend or before a major retracement. This makes us believe that price will slide towards 1.6600 but keep in mind that bulls are showing a lot of strength so moves north have a high probability of happening.
Fundamental Outlook
The British Consumer Price Index will be released Tuesday and will probably be the week�s main event for the Pound as the CPI is the prime measurement of an economy�s inflation. Higher values have the ability to strengthen the Pound, taking the pair higher. Wednesday the UK Claimant Count Change is announced, tracking changes in British unemployment and Friday Banks will be closed. Of course, the US events mentioned above will directly influence the pair throughout the week.
Written by:
Bogdan Giulvezan
The article above is based on the writer�s 5-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.
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