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Economic Calendar

EURUSD

The EURUSD opened after the weekend break with a small gap lower. The pair had closed at 1.2758 and re-opened at 1.2746, 12 pips lower and the equivalent of a 0.1% decline. The price continued to fall reaching 1.2736 and then 1.2731 which is the lowest point so far this week. The pair has since recovered closing the gap and rising above the Friday's close and hitting 1.2778. At present as seen on the H4 Chart the price swung from 1.2640 to 1.2888 on the 15th of October and now the price is precisely at the mid-point, 50% of the move at 1.2765. For several days the price had held towards the higher end of the up move and implied an increased probability of an extension higher. Now the outlook is mixed. The range is presently defined between 1.2705 and 1.2845, inside the wider range of 1.2640 and 1.2890 established on the 15th of January. Our call on Friday was spectacularly successful:

Written on Friday

'On the other hand there is potentially a triple top formation at 1.2840-1.2845 whereby as long as the price holds below this level the setup could favor a downside move. Just below 1.2840, e.g. between 1.2820-1.2840 could offer favorable odds for put options on price declines.' At present the Euro is under pressure with the pair below 1.30 and still trading below the downtrend channel as seen in the H4. As long as the pair remains below 1.30 and below the downtrend channel, the bias remains bearish.

This morning German PPI printed at 0.0% while Eurozone Current Account came out at 18.9B disappointing expectations of a 21.3B surplus. EURUSD Support areas include 1.2700, 1.2600 1.2500, 1.2425, 1.2300. Resistance levels above are at 1.2845, 1.2800, 1.2900, 1.30 figure level, followed by 1.3165.GBPUSD

EURUSD 30 Min Chart

EURUSD

EURUSD 4 Hour Chart

EURUSD

Pivot Point Table

EURUSD Levels
Resistance 1 1.2786
Resistance 2 1.2806
Resistance 3 1.2834
Pivot 1.2759
Support 1 1.2739
Support 2 1.2711
Support 3 1.2691

GBPUSD

The GBPUSD continued to move higher this Monday morning to reach 1.6123 vs Friday's close of 1.6090. The price is now approaching a key level at 1.6127. A significant break above this area will lead to a one-week high, above which 1.6220 is the next target higher. A failure to rise above the 1.6227 area will lead to a bearish Head and Shoulders pattern that could push the pair lower. The GBPUSD has rebounded from as low as 1.5875 earlier last week and needs to hold firmly above the 1.6000 level to maintain a bullish bias. Overnight the Rightmove House Price Index rose by 2.6% showing that the housing price rises this year in the UK are still in progress. This is supportive of the UK economy and the pound as huge housing demand in the capital in London has led to a price surge of over 30% so far this year. Generally the UK economy has improved and the outlook is improving following the slowest recovery from a recession in a century. There is little GBP economic data of real significant out of the UK until Wednesday, and this will allow price action and the trend to assume control over fundamental factors, meaning the pair is more likely to trade on momentum and technical rather than fundamentals relating to the GBP.

The RSI on the 4 Hourly Chart had reached 66.5 at a price of 1.6113 and declined to 30.0 during move down to 1.5875. The pair then reacted perfectly to the indicator that indicated we were in oversold territory as it bounced higher during this 250 pip move. Now the RSI has returned to 62 and is approaching overbought territory. We are approaching the level on the RSI from where the previous sell-off occurred. Also the pair needs to move higher as the current level in the market is in perfect tandem with the downtrend line drawn on the H4 Chart. A break above will cause upside momentum and a break below could see a sharp price decline materialize. Support levels for GBPUSD can be seen at 1.6000, 1.5900, 1.5850, 1.5800, 1.5725, and 1.5650. Resistance to the upside at 1.6100, 1.6150, 1.6200, 1.6250, 1.6300, 1.6375.

GBPUSD 30 Minute Chart

GBPUSD

GBPUSD 4 Hour Chart

GBPUSD

Pivot Point Table

EURUSD Levels
Resistance 1 1.6131
Resistance 2 1.6147
Resistance 3 1.6173
Pivot 1.6105
Support 1 1.6089
Support 2 1.6063
Support 3 1.6047