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Forex4you Technical Analysis 17 Janauary 2011

EUR/USD: Technical Analysis

Something of a reversal occurred at the 1.3250 highs and the exchange rate has fallen sharply overnight. There is a head and shoulders top pattern on the hourly chart which has broken its neckline and has a downside target of 1.3180. This coincides with a support level at 1.3170. In Elliot terms this may be a wave 4 correction of the rise from the 10th, so once the exchange rate finds support it may rally back up to the highs again in a final wave 5.

EUR/JPY: Technical Analysis

We are probably in a 4th Elliot wave of the rise from the 10th Jan lows. It may have further to go; it may have finished - it has completed the minimum requirement by crossing to below the MACD zero-line. This could imply wave 5 up may be near at hand. There is also support from the trend-line from the 10th Jan lows and the exchange rate is posting a hammer candlestick on the hourly. There was a bullish weekly engulfing candlestick last week which has upside potential although this must be mitigated in the short term by yesterday’s hanging man and today’s confirmatory drop. Eventually wave 5 will rally, probably reaching the recent highs and surpassing them a little, with an upside target of 111.25 where the monthly pivot rests. If wave 4 extends it might be expected to reach support at 108.90 – although there may be a small recovery to 110.10 initially.

Analysis by: written by Forex4you analyst

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