Weekly Technical Strategist

Weekly Forex Technicals | Written by FXTechstrategy | Oct 12 08 13:55 GMT |

A Follow-Through To The Downside Sees EUR Invalidate The 1.3682/66 Levels. Loss of The 1.7447 And 1.7251 Levels Risk The Pair's 2005 Low Clears Key Support At The 103.54/78 Zone, Eyes A Retest Of Its YTD Low EURUSD EUR's downside momentum continues to increase following through to the downside on its previous week gains and breaking decisively below its April'07/Dec'2004 highs at 1.3682/66 to close the week at 1.3410.This marks its lowest price since Mar'07 and has now activated the resumption of its medium term decline started at 1.6038 towards its Dec'04 high/August'07 low at 1.3366/61.On further weakness, its .382 Fib Ret(0.8231-1.6038 rally, monthly chart) at 1.3054 and possibly even its Jan'07 low at 1.2866 will be aimed at. Its weekly and monthly studies are bearish supporting its current medium term declines. Corrective recovery if seen should target its April'07 high at 1.3682 initially and then the 1.3852/82 zone, its Sept 11'08 low/July'07 high. These levels are expected to cap further recovery by reversing roles as resistance and turning the pair lower again. On the whole, with the resumption of its medium term decline seen, the 1.3366/61 zone is EUR's next downside target. Directional Bias: Nearer Term -Bearish Short Term -Bearish Medium Term -Bearish Performance in %: Past Week: -2.80% Past Month: -5.03% Past Quarter: -10.44% Year To Date:-5.53% Weekly Range: High -1.3785 Low -1.3259 Weekly Chart: EURUSD GBPUSD GBP completed a second week of downside weakness on Friday breaking through key layers of support at the 1.7447, 1.7232 and 1.7049 levels to put the next downside target at 1.6857. The 1.7049 level is very significant as it represents its 2005 low where a convincing break will put GBP in a longer term bearish territory towards the 1.6857 level, its June'03 high and then its .618 Ret (1.3682-2.1161 rally, monthly chart) at 1.6552.Its weekly studies are bearish and trending lower supporting this view. While a test and break below the former (1.6857) is likely and in our view should target lower prices, corrective bounces could be seen with the 1.7447 and 1.7232 levels coming in as the possible upside targets. All in all, GBP now looks to head further lower having closed below its 2005 low at 1.7049. Directional Bias: Nearer Term -Bearish Short Term -Bearish Medium Term -Bearish Performance in %: Past Week: -3.82% Past Month: -2.10% Past Quarter: -10.54% Year To Date: -14.17% Weekly Range: High -1.7697 Low -1.6786 Weekly Chart: GBPUSD USDJPY Having decisively broken and closed below the 103.54/78 zone, its July/Sept'08 lows, USDJPY now eyes a retest of its YTD low at 95.75,printed in Mar'08(see latest our Special Focus for medium term view).Although a recovery higher was seen on Friday following a test of the 97.91 low, as long as those upside gains are contained by its eroded supported now turned resistance at the 103.54/78 zone, its decline off the 110.67 level, its Aug 15'08 high is likely to head lower through the 100.02 level, its April 10'08 low and the 95.75 level, its YTD low. Weekly momentum indicators remain supportive of this view. In the meantime, if its recovery initiated off the 97.91 level strengthens further, nearer term upmove could be seen towards its May'08 low at 102.58 and then the 103.54/78 zone where a cap is expected. In short, USDJPY has halted its medium term recovery started at the 95.75 level and opened the door for a return to that level again. Directional Bias: Nearer Term -Bearish Short Term -Bearish Medium Term -Bearish Performance in %: Past Week: -4.43% Past Month: -2.56% Past Quarter: -0.03% Year To Date -9.90% Weekly Range: High -105.15 Low -97.91 Weekly Chart: USDJPY Mohammed Isah Market Analyst www.fxtechstrategy.com