FX.co ★ EUR/USD Weekly Review August 22, 2011

The pair is consolidating above the broken uptrend line & inside the bullish channel.

Sideway consolidation is apparent on the daily timeframe with pressure to visit 1.4150-1.3970 as long as the pair is unable to break 1.4550.

This sideway movement is contained inside the slightly bearish channel.

Last Friday we had 4H candlestick closures as shooting star & high wave indicating weakness of the bullish move & beginning of bearish one towards 1.4300.

Also there's possibility of formation of Head & Shoulders reversal pattern which if confirmed it will target 1.4300 then 1.4150.

Review

Long Term

The pair is still bullish as long as it has weekly support level 1.3950 intact.

Area 1.4150 - 1.3950 is considered a significant weekly support because :

- Lower limit of the bullish channel.

- Broken downtrend line.

-Fibonacci 38.2%

-Previous tops and buttoms.

Along the last 3 months, the pair has been consolidating in slightly bearish sideway movement failing to make higher highs.

In general, this is considered retracement as long as it continues inside the bullish channel & above 1.3950.

Short-Term

The pair is consolidating inside a narrow range between 1.3970 & 1.4550.

Break of one of the limits of this range brings movement in the same direction.

Break of the upper limit is more suggested targeting 1.4850-1.4880.

The expected short-term scenario is :

Bearish move towards 1.4300-1.4260 then either bounce towards 1.4430 or break targeting 1.4200-1.4170.