The weekly chart is also bearish with three progressively shorter downtrend lines that should serve as resistance. The nearest one has the resistance at 1.3774 which is in line with shorter term price projections should the pair climb over 1.3750. The second one nudges into the 1.40 area and just as I wrote in the last post on the monthly chart, there are older price projections that support this. So there's a bit of uncertainty as to where price might go.
Also of interest on the weekly chart is the failed evening star pattern. I circled the first two candles that would have been part of this pattern. The third one would have had to close deep into the body of the first candle. Obviously, this didn't happen. I always take note of failed patterns because they sometimes are powerful signals that the opposite price action may occur. The two completed weekly candles since then (this is the third week) were indecisive but seemed to be rejecting higher prices with their long upper shadows.
This week is the third week with a lower low and lower high which is bearish. However, the 10 and 20 EMA have been serving as support, even for this week's candle with a long, lower shadow (so far it's a shadow, but how likely is the pair to drop significantly today?)
Another thing to note on the chart is that this is the 5th week of a primary cycle following the low from January. I could go further into a cycle discussion but I won't as I'm unconvinced it's relevant. Still, it's something to be aware of. If there is any meaning, this is part of a longer cycle and it's unlikely to have topped yet. However, I think price will contain any additional rise and not some mystical cycle mumbo-jumbo so again, the place to watch is the upper 1.37 price and, if it gets beyond that, the 1.40 area. Support on the weekly chart is at 1.3480 and 1.3428, the 10- and 20-EMA.
Here's the weekly chart:
© Dianne Fecteau, 2011. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.
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