As shown on the weekly chart below fall from 1.3710 levels was contained well around 1.2750 levels, If we back to the past a little bit , and checked this area, you could notice that we have strong demand zone around 1.2500/1.2700 levels in medium term view. how !!
According to weekly %R Williams, we have 3 bullish divergence(s) around 1.2700 levels, added that 1.2500 is protected by the weekly EMA (30) , Sept 2012 low, and it’s a round number..
See how the pair pulled-back strongly from 1.2755 levels 2 weeks ago, almost 400 pips in one day, I believe all those signs are early warning for a trend change in the medium-long term view.
Now the smart question is ; what could make the EURO dip below 1.2500 levels?!!!
I won’t say it’s impossible, but it’s not easy at all, I believe something abnormal should happen in the world or in the EURO zone to force the EURO to dip below 1.2500 levels…
On the monthly chart, the pair is under pressure after topping at 1.3710, but it’s already declined almost 1000 pips and that’s fair enough, however; this is how I see the market ; I think the pair will move sideways within 1.2700/1.3300 range for 8 -12 weeks before flying 1000 – 1200 pips , I mean It will fly by the end of this year between Oct and Dec….
For GBPUSD, look at the weekly chart, it’s clear that the bearish trend loses its momentum , added to the that, the weekly close above 1.5221 confirmed bottoming at 1.5813 levels and the pair is likely to retest 1.5750 as long as 1.4813 holds, above 1.5750 will pave the way towards 1.6000/1.6400 levels, below 1.4813 will extend weakness towards 1.4400 levels.
The same thing as EURUSD, I think the GBPUSD will consolidate within 1.4900/1.5500 range for 8 -12 weeks before flying 1000-1200 pips by the end of this year…
Note that the whole world is likely to start recovering strongly from the effect of the global economic crisis which started in 2008 during 2014 ,so it makes sense to see the EURO around 1.4000 levels and GBPUSD above 1.6000 in 2014…but since the EURO zone still has some issues, recovery is likely to move slowly..