Weeks like this are exciting for Forex traders – weeks where there’s a lot on the line for certain currency pairs. We’ll start with NZDUSD…
The pair has been in a strong uptrend since August of 2013 and is about to test the .8520 level for the fourth time in six weeks.
As seen in the chart below, the pair has been making higher highs lately but has struggled to make higher lows. Usually when a pair makes higher highs but fails to make higher lows, this can lead to a reversal. Of course only a clean break of .8520 can signal that a reversal is taking shape.
There are too many uncertainties to play this level “blind”. Only a daily close and a price action signal will indicate a long or short opportunity.
Speaking of a reversal pattern, check out the NZDUSD weekly chart below. For the past two years, this pair has experienced a sharp reversal in April and May. Will we see a repeat in 2014?
Regardless of the outcome, this is a big week for NZDUSD.
I was pretty bearish on USDJPY last week, however after the false break of support the pair’s future is starting to look a little brighter. That’s how it goes sometimes in Forex, bearish one week and bullish the next. But it’s good to be this way – flexible enough to see what is happening instead of what you think should happen.
At any rate, the pair broke through 4 hour resistance defined by the trend line from April 4th. Friday’s close also puts the pair just above near term support at 101.85.
I’m still not overly bullish, but USDJPY does appear to be making a run for trend line resistance around the 103 level. Monday should give us a good indication of whether or not this was just another false break.
I mentioned GBPAUD last week . So far the pair hasn’t made any significant move higher, however it is holding onto the 1.822 support level for now.
A level like this is best played on a daily close with a clear price action signal. Right now the market is respecting 1.822, but further confluence is needed to justify a trade.
The EURUSD is really starting to slide after the trend line break on May 9th. Friday’s close broke support at 1.364.
We could see the pair continue to move lower over the coming weeks toward the 1.347 level. This level is represented by several lows over the past 8 months plus the trend line from July of 2012.
