Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Forex4you Technical Analysis 31/08/10

EUR/USD: Technical Analysis

 Prices sank lower yesterday but there was a sharp bullish push on the hourly chart this morning. This may signal the next wave up, which is probably the C wave of a zig-zag pattern which is correcting the 5-wave move down from the Aug 6th highs.

   C could end at significant resistance highs at 1.2920 and this is also the terminus of the wave 4 of lesser degree –a common endpoint for corrections. A more conservative target could be 1.2815, where wave C would be exactly equal to wave A, their most common relationship.

   There is also the possibility prices will push even lower and break the 1.2625 lows. This could mean wave B was still unfolding and we were in a flat correction instead.

GBP/USD: Technical Analysis

Support 1.5500/1.5490 breakout was an early signal to a downward movement and suggested strengthening of the “bearish” potential, as well as high-possibility for a downtrend scenario.
The price fall below 1.5470 confirmed the “bearish” power, and the trading is currently carried on at 1.5390 with the “bears” trying to break it and continue their trend. Indicators turned downwards, which gives grounds to expect the “bearish” attempts to be successful. Nevertheless, only the breakout of level 1.5380, which is a previous local minimum and a strong support, will give sound grounds to anticipate target level 1.5340/30 testing. Key resistance 1.5550 breakout and the following upward movement will suggest a reversal to the “bullish” moods. In this case levels 1.5790/1.5800 are likely to be tested in the nearest time.

Analysis by: written by Joaquin Monfort
Forex4you analyst

Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.