EUR/GBP
Selling pressure continued in EUR/GBP last week. This move took the cross to the most negative levels traded for 16 months, retested the 62% correction point and, in the early part of the week, hugged the declining daily Keltner channel. Despite Wed’s limited bounce, and the fact that EUR/GBP has not posted 4 consecutive down weeks in 2 years, signals for sentiment are left negative.
So our call is Bearish but to leave room to Sell a Rally to 0.8172, Friday’s top. The risk is 0.8205 with an immediate target of 0.8102 then 0.8081, the 2013 base, and 0.8053.
The risk is that selling pressure is weaker than currently assessed – signalled above .8205, May 8th open, then towards .8249, the 2 week peak.
EUR/USD
The rejection of this month’s 2 ½ year highs by EUR/USD, and the break of a trend of higher weekly lows, deepened last week. A 2nd down week in a row took EUR/USD to 3 month lows, through the 100 day average and the bottom of the daily Ichimoku Cloud. Although losses were not extensive and the last 3 days saw consolidation above the 200 day average, sentiment going into this week is judged as negative.
So our call is Bearish but to leave room to Sell a Rally to 1.3772, Tuesday’s high. The risk is 1.3840 with an immediate target of 1.3634, the 200 day avg, then 1.3600 and towards 1.3517, a 38% correction of the 2013-14 rise.
The risk is that selling pressure is weaker than currently assessed – signalled above 1.3840, May 9th open, focusing on 1.3910.
AUD/USD
Against a background of positive signals for the AUD/USD in Q2, signals in each of the last 2 weeks have also been bullish and these have been confirmed. A daily Spring Hammer at May’s low, also formed from close to the 200 day average rate, as well as from close to the neckline to a bullish Head & Shoulders reversal has been the main influence to this view and with no sign yet that demand is ending.
But with topside impetus slowing with last week’s unchanged close, the outlook for this week is to buy on the open and on a dip to .9328, with a stop loss at .9271, the 6th May low trade.
Targets are to .9411, last week’s high, .9463, April’s 7 month high trade and then towards .9516, a 78% recovery to the Oct-Jan losses.