Euro and Pound Weekly Update - May 20 close

EURUSD

The Euro-Dollar made a new low last week barely 20 pips below and turned back to the bullish side almost recovering all the fall of the previous week and nearly reaching the 38.2% retracement on the weekly swing low. The daily extension level at 138.2% held the price which went back to around 1.4325, testing the broken level for a second time. Since Monday this pair has crossed the daily SMA100 to the downside and is presently trading near the level of the support area at 1.4050/60. I would expect a continuation to reach the daily SMA200 and next key support area between 1.3860/20. On the weekly charts we could be heading further down towards the confluence of the SMA100 and 34 at the round number 1.3800, however the actual support level seems to be holding and is quite strong, being reinforced by the presence of the weekly SMA200 and the proximity of the middle line of the Bollinger bands. Should we turn back again to a bullish scenario, the first target would be the round number 1.4400 at a 38.2% weekly Fibonacci retracement and actual level of the daily SMA34, and secondly the resistance area between 1.4490 and 1.4520 which would also represent a 50% retracement on the weekly charts.

GBPUSD

Last week was a ranging week for the Pound-Dollar which held and consolidated above the weekly middle line of the Bollinger bands and daily SMA100 at the level of the round number 1.6100, being contained by 1.6300 on the upside. Since Monday it has been trading below, making a new low near 1.6050 and presently retesting the break of the moving average. I would expect more downside for this pair, and am targeting the 138.2% daily Fibonacci extension at 1.5950 just above the 127% weekly extension at around 1.5940. Should the present levels keep holding above round number 1.6000 and break back through the SMA100, we would be heading towards SMA34 and weekly 38.2% retracement on the previous swing low, in the 1.6350/75 zone.

EURGBP

The Euro-Pound had a very volatile week which ended on an extremely long-wicked hammer candle after a run to 0.8840 which was strongly rejected back to the support at the SMA100 level, which is strong and backed up by January 2011 double-toppish highs. The price hasn’t been yet able since Monday to break further down but is still attempting to cross this barrier, and I think it could reach the next support zone at the round number and daily SMA200 (0.8600/20), below the 138.2% daily extension on the previous swing low . Next target would be between 0.8560 and 0.8580 (near the 161.8% extension). I see this pair as very bearish, however if the actual levels hold, we could eventually see the price going for another retest of the resistance area at 0.8750/75.