Forex Weekly review- 20.08.2012

It is possible to see how significant the 1.2290 price level is, for 5 weeks the price is passing it from both sides but cannot decide on the direction. At this point, after the last week, the price has stopped at this level. Breaking the 1.2290 price level followed by a breaking of the 1.2042 price level will sign the continuation of the downtrend towards the 1.1877 price level, which is the “Head and shoulders” pattern target (black broken lines). On the other hand, stoppage of the price on the 1.2290 price level will indicate that it is possible to see a correction of the last downtrend (blue broken line) in size of between a third and two thirds by Fibonacci.

In a continuation to last week review, the price is keeping on holding the 1.2290 price level and cannot let it go. Breaking this level followed by breaking the 1.2042 price level will sign for a continuation of the downtrend towards the 1.1877 price level, the “Head and shoulders” target pattern (black broken line). On the other hand, stoppage of the price on the 1.2290 price level and continuation of the ascending move will probably that a correction in size of between a third and two thirds of the last downtrend (blue broken line) is possible.

Just like on the weekly chart, we can see how the 1.2290 price level is used as the balance area while the price is passing it from both sides but stays around it without choosing the direction. Breaching of the closest resistance on the 1.2436 price level will probably lead the price towards the next re4sistance on the 1.2690 price level. On the other hand, breaking of the 1.2067 support level will probably lead the price towards the 1.1877 price level which was mentioned on the weekly chart review.

During the last trading week it was possible to see how correct the assumption from the last week review was. The price keeps on holding close to the 1.2290 price level while at the same time it is leaning on the Bollinger’s moving average as well, those two are used by a support to the price. Breaching the closest resistance on the 1.2436 price level will probably lead the price towards the next resistance on the 1.2690 price level. On the other hand, breaking of the 1.2067 support level will probably lead the price towards the 1.1877 price level (same target as on the weekly chart).

This is the 9^th week in a row that the price is ranging between the 1.5454 and the 1.5778 price levels. As long as the ranging period lasts longer, it increases the chance for a more aggressive breaking of the range. Breaching the 1.5778 price level is the breaking of the neckline of the “One in, One out” pattern (blue broken lines), while its target is exactly the next resistance on the 1.6170 price level. On the other hand, stoppage of the price at the current area will indicate that it is possible to see the price continues its range between the 1.5454 and the 1.5778 price levels, while only breaking of the lower ranging level should bring the price back to check the strong support on the 1.5270 price level.

Another week passed on the endless range between the 15450 and the 1.5778 price levels, While the price is still located under the Bollinger’s moving average but and above the 1.5600 support level. Breaching of the 1.5778 price level is the breaching of the neckline of the “One in, one out” pattern (blue broken lines), while its target is exactly the next resistance on the 1.6170 price level. On the other hand, stoppage of the price at the current area will indicate that it is possible to see the continuation of the ranging period between the 1.5454 and the 1.5778 price levels, while only the breaking of the lower ranging level should lead the price towards the strong support on the 1.5270 price level