Mid-week Analysis 1.18

EUR-GBP-USDX
The end-result of the report by the IMF to increase the lending capabilities to USD1Trillion have indeed made a difference in initially halting the bearish price action for the Euro. There were some heavy offers in the European trade before the news and some have reluctantly withdrew when the reports came out. Thus resulting to a corrective price movement higher for the EURUSD pulling back to the 1.2810/20 and is currently threatening the 1st resistance price level of 1.2880 in this couple of days trading activity.

EURUSD DAILY

Increased volume activity from profit-taking activities from earlier shorts added to the relief rally for the EURUSD and an equivalent decline for interest with the USDX which prompted the USDX to pull back lower to 80.48 as of this writing. However, on the technical stand point; this is a normal corrective action within an established trend. Remember, that current prices are within the major channel trend for the currency majors and any such correction may be seen as temporary, although with a significant price difference between the OHLC prices as well as a wider fluctuation on both directions before the end of each trading week.

While both currency pairs; EURUSD and GBPUSD are well within its bear trend the current price levels are slightly above their 21Day-MA, 1.2830 for the EURUSD and 1.5450 for the GBPUSD respectively. And this is accompanied by an increase in volume activity and interest. Besides, on the Asian opening at the start of the trading week, the 2nd price gap opening shown in the EURUSD daily price chart has indicated another attempt of an exhaustion and/or a run-away. On the contrary, the next couple of days trading showed a failure of a possible run-down of the prices which meant that a correction is probable than a possibility. And adding to this sentiment is the daily spinning top / candlestick bar for the GBPUSD. Likewise, the EURGBP cross weekly chart formation showing an inverted hammer; as another signal for a probable corrective movement was expected against all odds of a bear market sentiment. And these signals were indicated in our previous market view report dated the 16th of January 2012.

The extreme hysteria of the Euro market condition previously have already been adjusted by these recent corrective actions making the trading HI/LO price band wider and difficult to speculate as to when a turn around would occur for the continuation of the major trend. However, there would be limited speculative and bias offers near the 1.2880 that may be triggered in anticipation of a price reversal back to the downtrend. For now, the market's price behavior is apparently in a corrective phase with price directions moving wider this coming weeks.

As for the EURGBP cross, this price action has supported the contrary bear price movement from the low of 0.8250-a higher-low bottom level and at 0.8290-a pivotal price level that would fuel a bullish price action whenever the price settles above the 0.8390-0.8410 closing price range for the week. The current price for the EURGBP is at 0.8330 as of this writing. The continuation of the directional trend would be dependent upon the influence of the price action of the EURO and the US Dollar that would be taking the center stage of this market. Pls. refer to our website for a complete chart presentation at http://www.megatrade101.com/