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Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.
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At this time last week, I was discussing the potential of a EURUSD bounce. The single currency had just tested the April 2017 trend line near 1.2240 and looked ready to move higher toward the 1.2440 area.
Although buyers did push prices higher last week, they ran into a wall of sellers above 1.2360.
With neither buyers nor sellers taking control just yet, this twelve-month wedge pattern could go either way. The short-term trend is up which suggests a break higher, but of the two trend lines below, the one from 2008 has more substance.
I’m going to continue to hold off on trading the EURUSD for now. It’s going to take a daily close (using a New York close chart) above or below trend line resistance or support respectively to pique my interest.
As long as trend line support near 1.2290 holds on a daily closing basis, the 2008 trend line remains exposed. At the moment that level comes in near 1.2440.
Alternatively, a close below 1.2290 would expose 1.2160 followed by 1.2090. However, if the EURUSD does break trend line support over the coming sessions, I’m anticipating a move to 1.1930 and perhaps even 1.1700.
The GBPUSD spent the first week of April bouncing in a 90 pip range between 1.40 and 1.4090. I mentioned last week how it was going to take a daily close above 1.4090 to expose the 1.4240 resistance area.
Monday’s 1.4130 close did just that. Not long after breaking above key resistance at 1.4090, buyers forced a retest of 1.4240 during Thursday’s session.
However, sellers weren’t having a weekly close above the 1.4240 handle. The selling pressure was too much for buyers, and the GBPUSD went on to form a bearish pin bar during Friday’s session.
Like several other pairs, I wouldn’t be surprised to see the pound slide lower this week. As long as the 1.4240 area holds on a daily closing basis (New York 5 pm EST), the 1.4090 support area remains exposed.
Keep in mind that any short entry up here would be a counter-trend trade. Therefore, you may want to consider reducing your risk or even passing on this setup altogether.
The 107.40 resistance area on the USDJPY has held up better than I anticipated. At the start of last week, I wrote that “it’s going to take a daily close above last week’s high near 107.40 to open up the next key resistance at 108.50”.
That never materialized. Buyers kept the pressure on the 107.40 handle all week, but never managed a daily close at 5 pm EST above the level.
With 107.40 still intact as resistance, it leaves us right where we started on April 9th. The only difference is that buyers now have Friday’s bearish candle to deal with on top of securing a close above the key level.
I have no interest in the USDJPY at this time. I don’t consider Friday’s candle a selling opportunity, and without a close above 107.40, there isn’t much to get excited about from a bullish standpoint.
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I mentioned the AUDUSD on Thursday of last week. At the time, the pair was hovering just below falling wedge resistance at 0.7760/70.
The idea was that a close above the 0.7760/70 area would expose the next key resistance at 0.7870/80.
As you can see from the chart below, that never materialized. Buyers did extend the price well above wedge resistance on Friday but failed to secure a daily and weekly close above the level.
I’ve seen some traders suggesting that Friday’s pin bar is an opportunity to get short. If the AUDUSD does trend lower this week, I won’t be along for the ride.
First off, there isn’t enough room to the downside to justify an entry. The risk to reward ratio isn’t nearly favorable enough for my part.
Second, the pin bar formed after two days of sideways movement. In my experience, that suggests a weak signal, and one that could backfire on those who commit to it.
Last but not least, the falling wedge that has developed since January 26 indicates the AUDUSD wants to trend higher.
The three points above do not mean the pair won’t move lower this week. Nobody knows what will or won’t happen. It does, however, dismiss Friday’s bearish pin bar (in my opinion) and keep me on the sideline for the time being.
Following an impressive 400 pip rally that began on March 23, the NZDJPY is at risk of pulling back this week.
Buyers struggled throughout Friday’s session to gain traction above the 79.15 handle. You can see from the chart below how this area has directed price action over the last few months.
In fact, the 79.15 region has influenced the pair since February 2016.
With Friday’s bearish rejection candle in the books, we could see the NZDJPY move lower this week. The next key support doesn’t come in until 78.10 with a close below that exposing the 77.00 area.
Do keep in mind, though, that any pullback here may be temporary. Even with Friday’s bearish candle, the NZDJPY was up 120 pips last week and 340 pips since the March 23 low.
As such, it would be wise to act on the bearish pin bar below with caution or not at all.
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Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.
Click here to get access to the same style charts I use on this website.
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