Forex Analysis – GBP/USD & EUR/USD

GBP/USD Analysis

Monthly 

  • GBP monthly has a bearish engulfing candle – BEARISH weight
  • Overall trend shows sellers are in control and the attack for lower key levels is possible
  • 2015 high 1.59291 and low 1.45648 are key levels which we should expect strong reaction

Weekly

  • Fib key levels for 2015 are outlined in the weekly chart above
  • Note how GBP price action has broken below the bear flag formation
  • Weekly candles are bearish after the rejection higher
  • Note the orange key levels is an important area for potential long (1.48124)
  • Monthly and weekly chart seems to suggest that Sterling has rooms lower in 2016

Daily 

  • Overall trend from Monthly to Weekly is super bearish – thus sell on rallies remain the strategy
  • Blue boxes are area of interest for a short term reaction bounce 1.48868 and 1.45648
  • Red boxes are area of interest for sellers to reload and sell 1.52470 and 1.54079

Conclusion

Technically bearish and selling on rallies remain the best strategy. Previous fundamental scenario that support rate hike = stronger GBP has dissipated thus reducing the prospect that BOE is in a rush to do so. This will leave Sterling vulnerable to lower levels in the short to medium term.

EUR/USD Analysis

Monthly

  • Bearish candle that broke previous month low

Weekly

  • 2015 high 1.20051 and low is 1.04590
  • Bear flag formation suggest a continuous move lower with upside limited
  • Selling on rallies continue to be the way forward for now
  • Threatening the 2015 low and potentially target parity

Daily

  • Euro has a potential for a short term bounce higher but need to break out of the wedge
  • Red box indicate strong sell zone on any rallies
  • A break below 2015 low will see a big reaction that trigger stops

Conclusion

A short term bounce is possible via the daily chart but the technical outlook based on the larger timeframe suggests that sellers remain in control. Fundamentally, with ECB expanding their QE programme – the EURO looks doomed for parity if not another new low (before end of 2015? or beginning of 2016?)

 

 

 

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