6-9-08
01:06 GMT – Part of being a successful trader is looking not only your own “comfort” chart time but also looking at the bigger picture as well. This week I chose to post my weekly chart analysis for EUR/USD, GBP/USD, USD/CHF and USD/JPY. I do the analysis on all the pairs I trade, and recommend you do the same for the “big picture” but don’t have time to post them all.
Want to see a different pair next week? Post your comments below!
EUR/USD: As you can see on the chart below the EUR/USD is still firmly in an uptrend unless a clean break of 1.5284 is made. EMA20 (green line) has been acting as good support for the pair since early 2007 and last week showed us a strong bounce of this support. A close this week above 1.58 would confirm the resumption of the uptrend and is likely. The last time the weekly charts looked as they do now was in late 2007 when the pair was in a 1.43-1.50 range, which ended up breaking to the upside off a bounce of the EMA20 and challenging 1.60. Look for a similar result in the coming weeks with a challenge of 1.70.
USD/JPY: I believe that since 6/07 the UJ pair has been in a good Elliot Wave model drop with the rally below 100 the last hoorah of the 5th leg. Whether we are in the 1st leg or the 3rd leg of the retracement is a matter of debate (what’s not in Forex? ;). Last week’s candlestick was bearish but did make a new high and showed decent buying pressure. I don’t believe the doji means much considering the pair has been in choppy trading for the past several weeks. I expect to see more gains this coming week, but this next week will help to show the direction of the pair. Also the RSI closed above 50 for the first time in almost a year. A concern is definitely the EMA30 which has provided resistance for the pair in the past and also the resistance at 106.35 (former weekly support). A close above 106.50 would clear the way for the EMA50 currently around 108.
The exponential moving averages are still aligned in a downtrend though the EMA10 has flipped up and if the retracement continues will soon cross the EMA20.
USD/CHF: Pair remains locked in a clear downtrend, is getting pushed down by the EMA20 resistance (solid resistance since 7/07) and its RSI has just bounced off of 50 to the downside after posting a bearish hidden divergence a few weeks back. Selling near the EMA20 looks like the best strategy though last week’s candlestick was a bearish engulfing so we may or may not get another opportunity on the weekly chart for awhile.
Major concern is that the pair is in the 2nd retracement leg of a 5-3 Elliot Wave model retracement (since the possible 5 wave drop beginning 7/07), meaning a third retracement to the 1.0750 area could occur before more losses.
GBP/USD: The GU pair continues in its bearish channel since the trend reversal on 11/07. Two weeks ago we had a bearish doji that was NOT confirmed by a bearish close under the previous candlestick. Instead we saw a wave of buying at the end of the week courtesy of the ECB comments about the Euro rate increase. Until we see a close above 2.02, though, the pair remains bearish. From the weekly chart below we can see the best strategy for the week will probably be to sell of channel tops.
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