Morning technical analysis – 11 February 2014 | Alpari Newsroom …

Morning technical analysis – 11 February 2014 | Alpari Newsroom …

Morning technical analysis – 11 February 2014

February 11, 2014

by

Craig Erlam

in

Technical analysis

EURUSD

The outlook for this pair hasn’t changed much since yesterday, having failed to close above the 50-day SMA. It did close marginally above the 61.8 fib level yesterday and has made further attempts to break higher this morning, which makes it look a little more bullish, but it’s clearly struggling to gain any momentum above here. That obviously doesn’t mean it won’t but it does make me skeptical. Also, I don’t usually pay much attention to the 76.4 fib level, but this has clearly provided resistance in this case, which may suggest that all we’re seeing is a significant retracement rather than a continuation of the longer term bullish trend. As I mentioned yesterday, I need to see a break of 24 January highs before I become more bullish on the pair. Otherwise, we’ve just made another lower high following a lower low which is indicative of a continued downtrend.

GBPUSD

Sterling is struggling to break higher again today, with the 50-day SMA and the 38.2 fib level, 24 January highs to 5 February lows, continuing to provide solid resistance. Above here we also have the 20-day SMA providing further resistance around 1.6442. The 50-day SMA, particularly recently, has been an important level of support, so if it continues to hold as resistance, it could be another signal that the momentum has turned in favour of the bears. We’ve already had a break of a trend line and a move below the previous low, a failure to break above the 50-day SMA would result in lower highs being recorded, which if followed by lower lows would all but confirm the change of trend. That said, further confirmation will still be required in the form of a break below the descending trend line, that the pair broke above, and found support along, at the end of last year. A failure to break through this may suggest that this is merely the pair trading sideways and lacking direction rather than a reversal in trend.

USDJPY

The dollar is looking a lot more bullish against the yen recently. As we say in yesterday’s analysis, the pair failed to break below the Ichimoku cloud on the daily chart, which is a clear indication that the pair remains in a long-term uptrend despite the correction witnessed so far this year. The pair has also broken through two descending trend lines on the 4-hour chart and traders have clearly started buying into the dips, further confirming the more bullish bias in both the short and long-term. The next target for the pair will now be to record higher highs, above 103.44, in order to confirm the new uptrend, which will of course then need to be followed by higher lows. This could be tricky, with there being a couple of resistance levels along the way including 102.85, 20-day SMA which has been an important level of support and resistance in recent months, and 103, a key level of support and resistance so far this year. The former has been useful in identifying the trend recently, so a break above it would further act as confirmation of the bullish bias in the markets. Above here, further resistance should be found around 103.40, from the 50-day SMA. This is also a previous level of resistance.

Author: Craig Erlam

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Morning technical analysis – 11 February 2014 | Alpari Newsroom …

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