Euro and Pound Monthly Overview and Weekly Update - March 04/07 close

EURO AND POUND

EURUSD

Monthly Overview - March 2011

Euro-Dollar ended February while still below the steeper bearish trend line that formed from last November highs, showing a doji candle but with price sitting just a little above the SMA34, at the 61.8% Fibonacci retracement from June 2010 lows. A bullish continuation would attempt to reach the previous trend line upper level, which would coincide with a retest of the highs at 1.4280, while a bounce back to resume the bearish trend would be targeting 1.3060/20 at the SMA100 level, with 1.2000 as next psychological level and SMA200 which has practically remained flat over the last two decades.

Last week this pair reached SMA200 at the top of a symmetrical triangle, while on daily charts psychological level 1.4000 was touched and price ended forming a doji candle, at the upper line of a rising wedge. I would expect a fall back towards a 38% Fibonacci retracement level and bottom line of the wedge at 1.3800/1.3780 as a first target, then a bearish continuation to 1.3720/1.3650 with possibility of a break further down and retest of the previous lows. On the bullish side, and looking at the weekly momentum, the Euro-Pound could attempt a retest of November 2010 highs at 1.4280 but personally I don’t think it will reach much above psychological level 1.4200. The price action on Monday and today seems to be confirming the bearish view.

GBPUSD

Monthly Overview - March 2011

The Pound-Dollar is on a monthly bearish trend and as for EURUSD, ended February at the top of the pattern while sitting just above the SMA34, at the 38.2% Fibonacci retracement. Although we seem to have a bearish triangle formation/flag, the line of the lows has been ascending. Next targets to the upside would be a push to 1.6800/60 (50% and SMA200) and SMA100 near 1.7600/50 (2007 resistance level and 61.8% retracement on the longer down-swing) on a much longer term. A bearish continuation would be targeting 1.2000/1.1780 in a 127% extension from the swing.

Weekly charts show a bullish continuation of a steady ascending channel following the bottom line of an ascending wedge, and price ended near October 2010 highs. On daily however, we are hovering sideways on a slightly ascending lower step after the steeper ascending trend line was broken and retested two weeks ago. I would favor a bearish move to the middle line of the bands, SMA34 and 38.2% Fibonacci retracement at around 1.6000/1.5970 as first target, then a continuation down to the previous lows at around 1.5740 and 61.8% retracement level. Should it break last week’s highs, we would be targeting psychological level 1.6500 near a 127% extension of the previous weekly swing high. This week’s price action, after a failed attempt to break the highs, seems to be confirming the bearish view on this pair.

EURGBP

Monthly Overview - March 2011

The Euro-Pound keeps trading inside the symmetrical triangle formation and is getting near the breaking point. The tone is bearish but we could have a surprise to the upside and targeting 0.8900 at the 61.8% retracement on previous swing low. On the downside, next level would be a retest of the lows followed by an extension to the 127/138.2% Fibonacci around 1.7680/1.7600.

EURGBP Weekly Update at March 04 close

On weekly charts we can see that the price pierced the upper line of the symmetrical triangle, suggesting a bullish continuation for this pair. On the daily charts, price made a new high and seems poised for a retest of January highs at around the 127% extension of the overall previous swing high (from mid-February to last Friday) and could rise further to the upper line of the ascending channel, coinciding with the 138.2% extension. On the downside, we have the bottom of the channel at around 0.8400, then a retest of the lows, very close at 0.8360, and a possible break down to 0.8300 as the daily 127% Fibonacci extension of the swing high range and near the weekly SMA200. This week’s price action made a new high and has been ranging between 0.8635 and 0.8585, seemingly preparing for another break to the upside.