Morning technical analysis – 19 February 2014 | Alpari Newsroom …

Morning technical analysis – 19 February 2014 | Alpari Newsroom …

Morning technical analysis – 19 February 2014

February 19, 2014

by

Craig Erlam

in

Technical analysis

EURUSD

Having finally broken above the 24 January highs and the 61.8 fib level, the euro is starting to look more bullish against the dollar. That said, the pair is still likely to face significant resistance in the short term around 1.3810, which has been a key level of resistance on numerous occasions recently, and 1.3845, from the descending trend line, which dates back to 15 July 2008. A break above both of these levels would make the euro look a lot more bullish going forward, I’m just not convinced it will happen. So far this morning the pair appears to have lost any momentum is gained yesterday, but I expect this is just a brief retracement, possibly a retest of the 24 January highs, or the 61.8 fib, as a new level of support.

GBPUSD

Sterling is once again looking bullish against the dollar, following its brief retracement. We saw some profit taking in the pair after it reached the 61.8% fib expansion, following the 50% retracement from 12 November lows to 24 January highs. However, the pull back was short lived, with the pair finding strong support around 1.6667, the previous high that it broke above last week. The next target for the pair will now be Monday’s highs of 1.6822, followed by 1.6877, 16 November 2009 highs, 1.70, and 1.7042, 5 August 2009 highs which roughly coincide with the 100% fib expansion level.

USDJPY

The dollar is looking a little weaker against the yen having run into resistance once again around 102.70, the level it failed to break above last week. Until then the pair had been looking quite bullish, having broken through a number of descending trend line and made new higher lows. However, the failure to break above this level again isn’t necessarily bearish for the pair, it may just suggest that we’re going to see a little more consolidation first. As you can see on the daily chart below, the recent price action has led to the formation of an ascending triangle, or at least a speculative one, we will need some confirmation with a third test of the bottom of it. Ascending triangles are usually bullish regardless of whether they are formed at the top or the bottom of a trend, which, as I noted above, suggests we’re simply seeing more consolidation before a break higher, rather than a continuation of this years downtrend. Before the pair reaches the bottom of the triangle though, it is facing numerous support levels, including 102.17, 50-period SMA on the 4-hour chart, 102.05, 50% retracement of the move from Monday’s lows to yesterday’s highs, which roughly coincides with the 20-period SMA on the 4-hour chart, and 101.90, the 61.8% retracement of the above move.

Author: Craig Erlam

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Morning technical analysis – 19 February 2014 | Alpari Newsroom …

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