Euro and Pound Weekly Overview – Dec. 12 to 17, 2010

The table below shows the Weekly and Daily Supports, Resistances and Risk-to-Reward forecasts obtained with the Forex AI platform calculator, for the major currency pairs that involve the Euro, British Pound and US Dollar. Technical analysis for this week has been based on Daily charts for EURUSD, GBPUSD and EURGBP, using 20-day Bollinger Bands with 1.5, 2 and 2.5 deviations, 34, 100 and 200-day simple moving averages, trend lines and Fibonacci retracements and extensions.

SUPPORTS AND RESISTANCES

Weekly and Daily Close = December 10, 2010

WEEKLY OVERVIEW – DAILY CHARTS

EUR/USD

Last week, Euro-Dollar prices have been trying to pierce the bearish trend line and ended on Friday barely above it, while still heavily undecided and trading between SMA100 and SMA200, where a first attempt to break down two weeks ago was rejected. At the moment of the analysis we had set the SMA100 level as a probable first target to the upside, which is presently being pierced and crossing the middle line of the bands above 1.3328. If today’s close remains above both levels, our second target for a 50% Fibonacci retracement on the previous swing low and retest of SMA34 (1.3580/1.3630) will be on its way, if the resistance zone between last highs and previously broken support (1.3420/1.3460) is surpassed. I would then favor a bounce back down from the SMA34 level towards a retest of SMA200 which if broken would lead to a near 127% extension at around 1.2680 which is the next level of support from early September. However, should Euro strength continue, we would see a retest of previous highs at around 1.3780 and further heading above, looking for psychological level 1.4000.

GBP/USD

This pair presented a slighly upwards consolidation over last week, and had closed last Friday below the bearish trendline. However, the price action of today has now almost reached SMA34 from where I would expect a bounce back down for a retest of the lows around 1.5500, and further extension (127%) to September’s lows at 1.5330 also testing SMA200. A break to the upside will head towards the previous resistance area and highs near 1.6100.

EUR/GBP

Although the overall outlook is still heavily bearish, this pair has been heading today towards SMA100 and will probably go further to SMA200 which is presently at 0.8530. All three moving averages are in confluence and I would expect a rejection back to the downside for a retest of the support zone (0.8340/0.8360) which, if broken, will lead to an extension towards early September-late August lows matching Fibonacci levels 138.2/161.8%. Ultimate probable target is below at 0.8150.