The Week Ahead April 3, 2011

April 3, 2011

Technicals

The GBPUSD started last week on a bearish note when it broke below the 1.6000 major whole number level. Since this level was the 61.8% Fibonacci level AND cable had always respected this Fibonacci level, I thought bears were in full force. Nope. The GBPUSD ended the week extremely bullish with its close above 1.6100.

GBPUSD daily chart April 3 2011

As the market opens, watch how price behaves at 1.6100. If price can hold support at this level look for continued strength into the 50% and 61.8% Fibonacci retracement leves. Beyond there is the large quarter at 1.6250. This is the level to watch for clues about direction this week.

The EURGBP remained at the highs after a small correction took it back to the large quarter point at 0.8750. Price found support at this level (to the pip) and rallied to new 2011 highs at 0.8850. After the highs, price corrections now find support at 0.8800 to close the week outside the hesitation zone at 0.8829.

EURGPB daily chart April 3 2011

As long as price remains above 0.8800/25, look for price to continue to higher and move towards 0.8900 this week. However, if price breaks below 0.8800 watch how price behaves at 0.8750. A break below 0.8750 and price targets the now-support zone between 0.8620 and 0.8670.

The GBPAUD spent last week in a downward channel between 1.5660 and 1.5450 with lower highs and lower lows. Though price action remains bearish, the price never gained momenutm in either direction last week and closed the week at 1.5500.

GBPAUD daily chart April 3 2011

As long as price maintains its downward channel and continues to put in lower highs, the GBPAUD remains bearish. However, the longer price remains at 1.5500 without breaking lower below the hesitation zone at 1.5425 then odds favor the bulls for a more significant correction of the price breakdown on the daily chart.