Weekly Forex Technical Outlook – 9th February

Feb 09, 7:03 am
weekly_forex

EURUSD (1.12): Price action in EURUSD is in a consolidation mode, trading within the range of 1.123 – 1.110. From the Median line plotted, we notice that the rally to 1.12 has been rather strong with little to no pullbacks. A correction to the downside is currently building up, especially on the lower time frames such as H1 and H4, where the Stochastics oscillator is forming a strong bearish divergence, failing to confirm the highs. A decline to 1.09 – 1095 support is ideal but will be confirmed on a break below 1.11 minor support. Establishing support at 1.09 – 1.095 will confirm a retest of the 4-hour inverse head and shoulders pattern, where the target of 1.12 was already achieved. The medium term bias in EURUSD remains to the upside as long as the support of 1.09 – 1.095 holds. To the upside, above 1.12 – 1.13, the next level of interest comes in at 1.16. The upside bias will be invalidated, if EURUSD manages to close below 1.095 – 1.09 with 1.056 coming in as the next support level.

EURUSD – Prices remain capped below 1.12
EURUSD – Prices remain capped below 1.12
  • Bias (D1): Downside
  • Support: 1.09 – 1.095
  • Resistance: 1.12
  • Technical forecast: With 1.12 resistance holding and no pullbacks, EURUSD is poised for a move back to 1.095/1.09 to establish support

USDJPY (114): The dollar remains very weak against the Yen and with the support at 118 being broken, 112.5 comes in as the next support level of interest. However, a pullback is on the cards, with a retest back to 118 – 119 region acting as potential resistance levels after being broken as support. The Stochastics oscillator, however, shows a modestly higher low being formed against price’s lower low. This bullish divergence points to a correction to as much as 121 region, which is achievable if prices manage to break back above the 118 support. Despite the possibility of a move back to 121, USDJPY remains biased to the downside with 112.5 followed by 104.85 in the longer term coming in as potential support levels that could be targeted.

USDJPY – Expecting a pullback to 118/119
USDJPY – Expecting a pullback to 118/119
  • Bias (D1): Flat/Correction
  • Resistance: 118 – 119
  • Support: 112.5
  • Technical Forecast: A pullback to 118/119 could mark a test of resistance to the newly broken support level. The longer-term bias remains to the downside

GBPUSD (1.44): GBPUSD has reversed sharply off 1.4631 level of resistance. The move to the downside could see a decline to as low as 1.42 support. Currently, the move lower is supported by the hidden bearish divergence where the Stochastics printed a higher high against price’s lower high. Establishing support at 1.42 will mean forming a base as GBPUSD could be potentially looking to a move higher. 1.46 is the first resistance level followed by 1.48 and eventually 1.50 if price manages to move higher as expected.

GBPUSD – Dip to 1.42 support likely
GBPUSD – Dip to 1.42 support likely
  • Bias (D1): Flat/Correction
  • Support: 1.42 – 1.43
  • Resistance: 1.463
  • Technical Forecast: With 1.463 holding strongly, 1.42 retest to establish support could see GBPUSD prepare to push higher

USDCAD (1.39): USDCAD has broken down strongly below 1.43 support and eventually moved back to 1.3958 – 1.3914 minor support/resistance level. The bounce off 1.374 is formed based on the dynamic support being offered by the Median line. If prices manage to move above 1.3958, a test back 1.42 is very likely. However, a pullback to 1.433 could mark a proper correction for further downside in USDCAD.

USDCAD – Pullback to 1.433 expected
USDCAD – Pullback to 1.433 expected
  • Bias (D1): Flat/Correction
  • Support: 1.375 – 1.37
  • Resistance: 1.433
  • Technical Forecast: With price action hold at the support, USDCAD could see a stronger move higher back to 1.433 to retest the broken support for resistance

USDCHF (0.98): After failing to clear the resistance zone of 1.026 – 1.015, USDCHF has posted strong declines to fall back to the identified support level of 0.992 – 0.9848. If this support level holds, USDCHF could expect to see a minor bounce back and the rally could see possible retest back to near the breakout level of 1.0045. As long as price action trades below the resistance level, the bias in USDCHF remains to the downside. A break of support at 0.992 – 0.9848 could signal further declines with a test to 0.9547 coming in as the next support level of interest.

USDCHF – Pullback to 1.0045 with further declines likely
USDCHF – Pullback to 1.0045 with further declines likely
  • Bias (D1): Flat/Correction
  • Support: 0.992 – 0.984
  • Resistance: 1.015 – 1.0045
  • Technical Forecast: A retest to 1.0045, marking the breakout level from the Median line could see a stronger correction lower to 0.954, on a break of 0.992/0.984 support.
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John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.

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