Forex Investment and Currency Trading

EUR GBP

The appearance of bearish divergences on the daily/weekly momentum studies (e.g. 9 period smoothed RSI), coupled with the heavily overbought readings apparent on the monthly studies suggest that intermonth risk is shifting to the downside. More specifically, a move back below the .7790 level (76.4% retracement of the 1995 - 2000 decline) on a monthly close basis, would suggest that price is entering a retracement phase. A subsequent failure of the more significant .7640 support (projected channel base and minimum 23.6% retracement of the January 2007 - March 2008 advance) would confirm the major high at .7980 and provoke an extension of the downleg;

objectives .7430/.7260.
EUR JPY

The sentiment battle continues to play out within the converging 152.00 - 165.60 intermonth range extremes, which have contained price since July 2007. The immediate interweek outlook is constructive within the aforementioned range, with local support at 158.25 providing the platform for gains towards the intermediate 161.00/163.15 levels. Once again, the bigger question to be addressed is one of topping/reversal behaviour versus a consolidation phase (manifested as a continuation pattern); prior to primary uptrend resumption. Suffice to say, a breakout strategy seems sensible at this stage (mildly positive bias), with a resolution of the 152.00 - 165.60 range (on a monthly close basis) yielding breakout targets of 138.60 and 179.20 respectively.