Forex Weekly Review and Outlook 

EUR/USD
EUR/USD's consolidative trading extended for another week last week, still being trapped within 1.2005 and 1.2179. EUR/USD can still take various possible paths in these type of extended consolidation. A triangle formation is being one of the likely ones. If that's the case, there should be one more pull back initially next week before reaching 1.2179 resistance and such pull back should be contained well above 1.2037 and bring a strong rally that pushes EUR/USD above 1.2179 to resume the rally from 1.1776. However below 1.2037 support will invalidate this case and imply a deeper pull back to below 1.2005 is more likely.

A firm break above 1.2179 will confirm rally from 1.1776 has resumed with initial target at 61.8% projection of 1.1776 to 1.2179 from 1.2005 at 1.2254. And possibly further towards cluster resistance of 1.2408/14 (38.2% retracement of 1.3668 to 1.1639 at 1.2414 and 100% projection of 1.1776 to 1.2179 from 1.2005 at 1.2408).

From a bigger picture, we have been medium term bullish since EUR/USD broke above falling trend line from 1.3483 to 1.2587, with bullish convergence displaying in daily MACD and RSI.. The whole down trend from 1.3668 is considered completed with an important medium term low formed at 1.1639, slightly above long term fibo support of 1.1634 (38.2% retracement of 0.8344 (2001 year low) to 1.3668 (2004 year high)). Hence with the current rebound from 1.1639 is viewed as at the same degree as the whole down trend from 1.3668, we might be seeing the current rebound extending to 1.2587 resistance or above in the coming weeks. And we'll be keeping this view until we see signs of reversal or a break below 1.1930 support.

However, the extended consolidation has dragged daily MACD flat now any deep fall next week that pushes EUR/USD to below 1.1930 could market the end of the whole rebound from 1.1639 with daily MACD turned falling. In such case, we could see a retest of 1.1639 low soon.

GBP/USD
Cable edged higher on Monday reaching 1.7795. However, this rally from 1.7130 was limited, just below medium term falling trend line (from 1.9219 to 1.8498) with bearish divergence in 4 hours MACD and RSI, making the case a little more complicated. It's not yet clear whether the turn from 1.7795 represent a short term reversal or just a turn into sideway consolidation. However, with the fall from 1.7795 being supported by 1.7521 and brought late Friday's strong rally, chances favor the latter case.

There are some possible interpretation of the recent prices actions but we'll assume the rally from 1.7130 has ended at 1.7725 already with turn into volatile range trading since then with one leg of the consolidation skewed upside to as high as 1.7795. In such case, even though a pull back could happen initially next week, it should be contained well above 1.7521 and bring strong rally that pushes cable above 1.7795 resistance to resume the rebound rise from 1.7130. Initial target will be cluster resistance at 1.7902 (with 100% projection of 1.7047 to 1.7809 from 1.7129 at 1.7891, and 61.8% projection of 1.7130 to 1.7725 from 1.7525 at 1.7893)

As discussed before, a firm break above 1.7902 will confirm an important medium term low is in place at 1.7047 already with the whole down trend from 1.9554 completed. With the rebound from 1.7047 viewed as at same degree as the fall from 1.9554. In such case, cable could be seeing 1.8498 in the near future.

However, a deep sell off next week that pushes cable below 1.7521 support could mark the ended of the whole rebound from 1.7130 after meeting trend line resistance, with a head and shoulder top formation. And we could see cable falling back to 1.72 level in such case.

USD/CHF
USD/CHF's sideway consolidation extended last week with retest of 1.2891 resistance again. Similar to EUR/USD there are still various possible path USD/CHF's consolidation could take. However, late Friday's selling is putting favor to a triangle formation. In such case, even though we might still see a recovery initially next week, upside should be limited well below 1.2891 resistance and bring deep sell off to resume the fall from 1.3197. Break of 1.2722 support will add much credence to this case and confirmed with firm break of 1.2674, we should see USD/CHF fall towards initial downside target of 61.8% projection of 1.3197 to 1.2674 from 1.2891 at 1.2568.

However, above 1.2891 again will indicate recovery from 1.2674 is still in force for further rise towards 100% projection of 1.2674 to 1.2891 from 1.2727 at 1.2944.

From a bigger picture USD/CHF's steep fall from 1.3197 has broken rising trend line from 1.2239 to 1.2774 already. Bearish convergence in daily MACD is putting favor to the case that an important medium term top is formed at 1.3283 already and the whole up trend from 1.1288 has completed. Key support level is at 1.2695 cluster support (100% projection of 1.3283 to 1.2774 from 1.3197 at 1.2688). Sustained trading below this level will confirm the bearish case and USD/CHF's fall is expected to extend towards 1.2239 low or below in the coming weeks.

But USD/CHF has not broken this 1.1695 level firmly yet. Also, extended consolidation has turned daily MACD flat, leaving some doubt in this bearish case. But, we'll still favor the bearish case as long as USD/CHF stays clear of 61.8% retracement of 1.3197 to 1.2674 at 1.2997.

USD/JPY
As discussed before, USD/JPY's failure to break firmly below key cluster support of 113.74 (61.8% retracement of 108.75 to 121.38 at 113.57 and 38.2% retracement of 101.65 to 121.38 at 113.84) and bullish convergence in 4 hours MACD has indicated a short term low was formed at 113.41. USD/JPY continued the rebound from there and reached as high as 115.93 before turning sideway. And, it's now struggling at short term falling trend line shown.

The situation is still tricky since USD/JPY has yet to break firmly above the falling trend line and chances of another fall remains. However, with yen's weakness against other majors, we'll favor the steep decline from 121.38 has ended at 113.41. If that's the case, even though a pull back is possible initially next week, downside should be contained above 114.55 support. Break of 115.93 will indicate rebound from 113.41 has resumed for 117.01 resistance first. Also, since we're viewing the rebound from 113.41 as of the same degree as the whole fall from 121.38, rebound should be pushing USD/JPY to 118.17 resistance or higher.

On the other hand, below 114.55 will indicate the rise from 113.41 has completed and bias turned downside for retest of 113.41 support. Firm break below 113.41 low will confirm medium term weakness is still in force and encourage further decline towards 100% projection of 121.38 to 115.52 from 118.17 at 112.31 first. Otherwise, choppy sideway trading will follow in such case.