Week Ahead 22nd June Technical Analysis from FXMars

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Week Ahead 22nd June Technical Analysis from FXMars

Postby fxmars » Sun Jun 22, 2014 11:24 pm

Posted by fxmars.com
It looks like the price attempts to break the upper level of the orange bearish corridor from May 12. The last two candles of the price are a bit above the upper level, which creates the impression that the price might change its direction. At the same time, the stochastic oscillator is in a bearish divergence with the chart of the price, because it forms higher tops and bottoms, which is the second bullish signal we get. On the other hand, the big double top formation with tops from March 13 and May 8 is still not fully completed and it has about 30 more bearish pips to take. Such decrease would almost perfectly touch the bullish line which connects the bottoms from July 2012 and July 2013. For this reason, the current interaction with the upper level of the orange bearish corridor is crucial for the further movement of the price. A certain break through the orange level would probably change the direction of the price and it might reach the 1.36711 resistance, the already broken blue bearish trend line from 2008 and even the purple bearish line from March.
With its last two bottoms the price created a bullish trend line, which in a combination with the line connecting the tops from May 12 and June 4, forms a bullish corridor. If the lower level of the corridor manages to support the price we would probably see the price reaching the resistance at 102.770 and maybe the upper level of the orange bullish corridor. At the same time, the stochastic oscillator is in a convergence with the bullish corridor, which gives additional strength to the bullish scenario. If the price breaks through the lower level of the orange corridor, we would probably see the price interacting with the support at 101.197 and eventually the further support at 100.756.
The current bullish movement of the price brought the Cable to test the area around 1.70475, which indicates the 5-years high of the pair. The increase of the price to this level happened in something like a small rising wedge formation, which according to the wedge rules should be about to break in bearish direction at any time. Furthermore, the stochastic oscillator gives a clear signal for an overbought market. These three bearish signs create the impression, that the Cable might not break its 5-years high. If the price bounces in bearish direction, we would expect it to interact eventually with the support at 1.68377 and why not with the 1.67214 support.
As we have already mentioned, the situation here is pretty similar to the EUR/USD currency pair with the difference that the chart is a mirrored image to the Euro-Dollar and the double bottom formation here has more bullish pips to take – about 100 pips. As by the EUR/USD pair the price is attempting a break through the lower level of the bullish corridor from May 12 and again there is a bearish divergence between the chart of the Swissy and the stochastic oscillator, which supports the eventual bearish movement. If the price does a certain break through the lower level of the corridor, it might drop to the support at 0.88618, which indicates the neck line of the smaller double bottom formation (purple).
After breaking through the purple bearish trend line from April 10, the price returned to the same line and tested it as a support, which is an indication for a potential change in the bearish trend. When increasing, the price almost reached the 0.94580 level, which indicates the 4-months high of the price. A break through this level would confirm an eventual continuation of the bullish increase. At the same time, the price has been following a bullish trend line (orange) since May 29. The movement of the stochastic oscillator matches with the current movement of the price, which makes the bulls even stronger. If the price breaks through the resistance at 0.94580, it would make a 7-months high, which would indicate that the price would eventually seek for further tops.
As signalized from the bullish divergence (yellow) between the chart of the gold and the stochastic oscillator, the price did a sharp bullish break through the upper level of the blue bearish corridor from March 21. The increase of the price reached the level of 1321.88, which currently plays the role of a potential resistance of the price. After the increase, the price opened a bearish candle, which speaks of a potential rebound. As we all know after a break of a certain level, the price might eventually return to test it as a support, so a return to the upper level of the corridor and a test as a support is possible. Another support, which the price could meet, is the level at 1268.56. On the other hand, a break through the 1321.88 resistance might bring the price to the already broken purple bullish trend line from January 5.

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