Forex Technical Analysis 2012/25/01 (DOLLAR INDEX, EUR/USD, GBP/USD, AUD/USD) Forecast FX

Forecast for January 25^th, 2012

DOLLAR INDEX

The fact, that the correction of the EUR/USD currency pair is taking too much time, raises doubts about the future prospects of the American currency. However, technical analysis of Dollar Index erases these doubts in no time. At the weekly chart of the EUR/USD currency pair we have “head & shoulders” reversal pattern forming with the target in the area of 89.34. Here we have a very strong resistance level. At the moment Dollar Index is testing the broken neckline, thus indicating that in the nearest future American Dollar may start growing against all other currencies. The test of the trend’s rising line at the RSI is an additional signal to buy Dollar, we should expect the Index to rebound from the line and start moving upwards.



At the daily chart of the Index we can see the formation of the rising pattern with the final target in the area of 88.65. The price is expected to start growing from the current levels, and the correction will start at the level of 87.11. We can expect a new wave of the growth to start near the rising channel’s lower border in the area of 81.18.



At the H4 chart the Index was also supported by the trend’s rising line at the RSI, we should expect it to rebound and start moving upwards. Here we have two different scenarios. If the price breaks the maximum, the pair will continue moving upwards and the rising trend will continue as well. But if the price tests the level of 81.35, reverses and then breaks the level of 79.57, the prospects of the Dollar’s growth will be questionable. At the moment one can consider buying Dollar Index and American Dollar.

EUR/USD

At the H4 chart of the EUR/USD currency pair we have “failure swing” reversal pattern forming with the target in the area of 1.2879. Here there is a possibility that the price may form “head & shoulders” reversal pattern. At the moment one can consider selling the pair with the tight stop. If the price tests the area of 1.2880 and then returns to the level of 1.2980, one can consider selling Euro again with the tight stop and increase the amount of short positions only after the price breaks the level of 1.2880.

GBP/USD

Pound also continues moving inside the descending pattern. At the moment the pair is testing the channel’s upper border, we should expect it to rebound and start falling down with the closest target in the area of 1.5280. One can consider selling GBP/USD currency pair with the tight stop and increase the amount short positions only after the price breaks the level of 1.5525.

AUD/USD

Australian Dollar keeps moving inside the rising pattern, the market has defined the area of the 4th pivot point. We should expect the price to start falling down to the level of 1.0100. One can consider selling the AUD/USD currency pair only after the price leaves the rising channel. The final target of the rising pattern is the area of 1.0766.