Morning technical analysis – 18 February 2014 | Alpari Newsroom …
Morning technical analysis – 18 February 2014
February 18, 2014
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EURUSD
The euro is creeping higher against the dollar again this morning but once again, the pair is clearly running into resistance near those previous highs of 1.3739 and the 61.8 fib level, 27 December highs to 3 February lows. The pair could be showing overbought signs following yesterday’s gap higher, which was followed by a spinning top candle. This could be viewed as an exhaustion gap which would be bearish for the pair. If the pair does move beyond those previous highs and the 61.8 fib level then this would suggest that the pair is looking more bullish, prompting a move towards 27 December highs of 1.3892.
GBPUSD
Sterling is trading lower against the dollar this morning after hitting new 51-month highs on Monday. Most of today’s losses can be attributed to the lower inflation reading that was released this morning. However, it could also give us a good indication of how bullish the market is at these levels. The first test of support for the pair came around 1.6667, previous high, and so far the pair has held up well. It did briefly trade below this level but it wasn’t able to maintain any bearish momentum below here. If the pair fails to close below here it would represent a very shallow pull back in the move higher, which to me is quite bullish. The next target would then be yesterday’s highs of 1.6822, followed by 16 November 2009 highs of 1.6876 and 1.70. If the pair does break below 1.6667, further support should be found around 1.6604, 38.2 fib level, 5 February lows to 17 February highs, and previous resistance, 1.6536, 50 fib and 50-period SMA on the 4-hour chart, and 1.6470, 61.8 fib and the 200-period SMA on the 4-hour chart.
USDJPY
The dollar has broken higher against the yen today, taking it through the descending trend line and potentially hinting at the resumption of the long term uptrend. The pair found support earlier this month around 100.75, roughly the 50% retracement of the move from 8 August lows to 2 January highs and a previous level of resistance. From here the pair was looking a little more bullish but it failed to break above the previous high which could have been an indication that the bears are still in control. However, since then the pair has made higher lows, which is the first thing we need to see if we’re going to get a bullish reversal. The only problem now is that we haven’t seen a significant break of the previous high, which in my opinion raises doubts about whether we are seeing a technical bullish reversal, or simply an overreaction to the Bank of Japan decision over night. If we see further gains today, that would allay those concerns and act as the initial confirmation of the new uptrend, but for now I’m a little cautious. If the pair fails to break back above here, I’ll be paying close attention to how it reacts around the ascending trend line which dates back to 5 February. If this acts as support, it would create an ascending triangle formation which tends to be bullish in both an uptrend and a downtrend.
Author: Craig Erlam
Tagged EUR/USD, Fibonacci, foreign exchange trading, forex, forex uk, FX, GBP/USD, Metatrader 4, Moving Averages, MT4, MT5, Technical analysis, USD/JPY
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Morning technical analysis – 18 February 2014 | Alpari Newsroom …
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