Forex Forecast May 7th

EUR/USD slowed down

Euro slowed down last week after five weeks of gains against the USD, the pair didn’t manage to make a new high coming short a few pips of 1.3680 the YTD high. Price is forming has entered into a trading range for the past 3 weeks, bouncing around 1.3523 and 1.3680, a break on either side of this range would set the terrain for future more cleaner swing moves. If price gets bellow this 150/160 pip range, this meaning it is going to break the resistance of April 16th low at 1.3523, we can start looking at March 2005 high of 1.3483, March 21st high of 1.3410 and December 3rd high of 1.3365 as clear cut examples of former resistance levels now turned into support. If on the other hand the Euro recovers some of its strength and takes another shot at breaking above the 1.3668/1.3680 resistance we have to see how price action develops on the lower timeframes to establish some potential targets and resistance areas.

Resistance Levels

1.4532 – March 2005 High
1.3668 – December 2004 High

Support Levels

1.3523 –April 16th Low
1.3483 –March 2005 High
1.3410 – March 21st High
1.3365 – December 3rd High
1.3300 – January 7th High

USDCAD Focuses On Its 2006 Low

USDCAD-USDCAD traded to an eight-month low at 1.1030 on Friday and ended the week with a seven-straight week of downside losses, the first of such continued non stop losses since 1996.This is coming on the heels of a failure at 1.1875 high set in early Feb’07.With its gains from 1.0930 level, its May 2006 to 1.1875,its Feb’2007 high almost wiped out, the odds are for a challenge on and a possible break of 1.0930 low for additional losses towards 1.0891(monthly pivot point) ahead of 1.0692(Monthly pivot point).The pair remains supported by its monthly studies while its weekly and daily momentum are in the oversold territories suggesting an impending corrective bounce. If this materializes, such strength should first target its Oct 30’06 low at 1.1176 with a violation of there setting the pair up for a challenges on its Nov 08& 28’06 lows at 1.1254/85.This zone is expected cap upside gains but on a failure of there, attention will now shift to its .382 Fib Ret. at 1.1333(1.1825-1.1030 decline) followed by 1.1429, its Dec 20’06 low. This level is significant on both the daily and weekly time frames and also coincides with its .50 Ret at 1.1426, as such it should hold and bring downside losses again. On the whole, USDCAD, s downtrend remains intact and should resume following any corrective bounce if any occurs.


GBPUSD-GBP registered its second weekly losses at the end of the week regardless of its recovery off 1.9842 low on Friday. The pair has been weakening since hitting a 26-year high two weeks ago. This has switched its nearer term bias to the downside. With the pair holding below a falling trendline drawn off 2.0132 high and the 2.0000 psycho level still acting as resistance, downside pressure is expected towards 1.9915,its Jan 23’07 highs initially with a loss of there paving the way for further weakness aiming at 1.9824,its April 03’07 high. A sustained break below this zone clears the way for more downside pressure aiming at 1.9721/26 zone, its Mar 22 & 26’07 highs before its Feb 15 & 27’07 highs at 1.9673/77. Below here targets 1.9571/52 levels, its Mar 26’07 low/Dec’04 high. The pair’s daily studies remain supportive of this view. On the upside, the first target to aim at is seen at its psycho level at 2.0000 followed by 2.0059/72 zone, its April 25/26’07/May 01’07 highs with scope for extension towards 2.0132 level, its 26-year/2007 highs. A penetration and negation of this area must materialiase to bring the resumption of its medium term upside gains towards 2.0219, its 1.272 Fib Ext. (Monthly chart) and possibly its .786 Ret (2.4536-1.0463 decline) at 2.1484.All in all,GBP continues to look vulnerable to the downside nearer term but still maintains its medium term upside bias.