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GOLD: The commodity saw a sharp sell off wiping out its previous week gains to print a bearish engulfing candle pattern.This development now leaves Gold aiming at further downside prices towards the 1,443.70 level, its April 12’2011 low with a loss of there turning attention to the 1,409.75 level, its Mar 28’2011 low and then the 1,380.85 level, its Mar 15’2011 low. A combination of the last two levels should provide a strong support if tested and turn the commodity back up. Its weekly RSI is bearish and pointing lower supporting this view. Alternatively, to reverse its present weakness, a break and hold above the 1,576.20 level, its 2011 high must occur to set the stage for further gains towards its psycho level at 1,600 and then the 1,650.00 level. All in all, Gold remains biased to the upside in the long term uptrend but faces corrective weakness in the immediate term.
US Dollar Index: Rallies, Triggers Corrective Recovery.
US Dollar Index: A two-day rally on Thursday and Friday saw the index halting its long term downtrend and triggering a corrective recovery following a loss of momentum at 72.72 level. This development has produced a bullish engulfing candle pattern (bottom reversal signal) leaving the risk of a further corrective strength in the coming week on the table. This should bring the 75.81 level, its April 2011 high into focus. The 75.81 level is within the vicinity of Index’s Nov 2010 low at 75.65. A combination of these levels could force the Index back down if tested.
GBPUSD: Further Weakness Envisaged.
GBPUSD: With continued downside weakness seen, the possibility of further weakness is expected. The risk is for GBP to weaken further towards the 1.6164 level, its April 18’2011 low and then its psycho level at 1.6000. A halt is expected at that level to turn the pair back up. Its daily RSI is bearish and pointing lower supporting this view. Alternatively, the pair will have to break and hold above the 1.6516 level, its May 11’2011 high to end its present weakness and then open the door for a move towards the 1.6743 level and then the 1.6877 level, its Nov’2009 high. A loss of the latter level will pave the way for further strength towards its bigger resistance at the 1.7039 level, its 2009 higher.
EURGBP- The bearish momentum triggered off the 0.9040 level, its 2011 high continues to push the cross lower closing lower the past week and threatening further declines. The immediate risk remains for the cross to weaken further towards its April 05’2011 low at 0.8715 with a breach of that level setting the stage for further weakness towards the 0.8653 level, its Mar 23’2011 high followed by the 0.8532 level and possibly the 0.8500 level, its psycho level. A halt in weakness is expected at that level to turn EURGBP higher if tested. Both its daily and weekly stochastic is bearish and pointing lower suggesting further weakness. Alternatively, for the cross to restart its medium term uptrend presently on hold, a break and close above the 0.9040 level must occur to clear the way for further upside gains towards the 0.9147 level, its 2010 high and then its 2009 high at 0.9410.
USDJPY: The pair is now consolidating following its hammer triggered recovery off the 79.59 level, its May 05’2011 low.On a further strength, the pair should aim at the 81.70 level, its May 02’2011 high with a violation of there targeting the 82.80 level, its April 27’2011 high. A cap is likely to occur here and send the pair back down again but if this fails, we may see further gains towards the 83.09 level, its April 20’2011 high. Its daily stochastic is bullish and pointing higher supporting this view. The risk to view will be a return below the 79.57 level. This will set the stage for further weakness towards the 78.00 level, its psycho level and then the 76.18 level, its 2011 low where a break will resume its long term downtrend towards the 75.00 level.
USDCHF: The pair may have initiated a corrective recovery but continues to retain its broader long term downtrend in place since Nov’2008. However, on continued recovery into the new week, USDCHF will aim at the 0.8896 level, its Mar 16’2011 low where a reversal of roles as resistance is expected to occur and turn the pair back down. Further out, resistance is seen at the 0.9013 level, its April 19’2011 high and possibly further higher. On the downside, the risk to our analysis will be a return below the 0.8553 level, its 2011 low. This will open the door for more downside weakness towards the 0.8500 level, its psycho level with a violation of that level calling for further losses towards the 0.9400 and 0.9300 levels, all representing its psycho levels.
A look at EURCHF as we enter a new week.
EURCHF – Outlook for EURCHF remains to the downside following its loss of upside momentum at the 1.3238 level, its 2011 high. With continued declines seen at the end of the week, risk of further weakness is building up towards its major support at the 1.2422/04 levels, its Dec’2010/Mar’2011 lows. The cross is expected to find a breather there on an initial test but it should ultimately be breached and send the cross further lower towards its psycho levels at the 1.2300 level, the 1.2200 level and the 1.2100 level in the days and weeks ahead. This view is supported by its bearish weekly RSI which is pointing lower. On the other hand, EURCHF will have to break and hold above the 1.2728 level, its April 18’2011 low to signal any serious strength.
EURUSD: While EUR may have halted its corrective weakness and closed marginally higher the past week, it remains vulnerable to the downside nearer term. Its Friday sell off reversing most of the weekly gains is suggestive of a return below the 1.4046 level, its May 16’2011 low with a break of that level calling for further weakness towards the 1.4020/00 levels, its mar 28’2011 low/psycho level. Further down, the 1.3852 level comes in as the next downside target. Its weekly stochastic is bearish and pointing lower suggesting further weakness. Alternatively, on a violation of 1.4339 level and the 1.4422 level, further strength should build up towards its May 06’2011 high at 1.4586 and ultimately the 1.4938 level, its 2011 high.
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