[thrive_custom_box title=”” style=”dark” type=”color” color=”#fef5c4″ border=”fadf98″]
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.
[/thrive_custom_box]
EURUSD sellers followed through in a big way last week. Last Sunday I mentioned the close below the April 2017 trend line near 1.2300.
The big question at the time was whether or not Euro bears would come out to play. After all, sellers haven’t had much luck since the EURUSD began its ascent in December 2016.
Last week’s plunge of more than 200 pips was our answer.
As expected, the 1.2090 level attracted buyers on Friday. I’ve removed the 1.2160 level from my chart as I didn’t see much from buyers on the way down, although I’ll still keep it in mind as we move forward.
Given Friday’s bounce, we could see buyers take the reins this week. A retest of the 1.2240 area could establish a second opportunity to get short for a move back to 1.2090 and perhaps even 1.1930.
I’m also keeping an eye on what could be a descending channel forming from the February 16 high and the February 9 and March 1 lows. Depending on how things progress, I may discuss this pattern in greater detail over the coming sessions.
Following the bearish outside week that I mentioned in the last forecast, GBPUSD sellers drove prices lower last week by more than 200 pips.
You may recall from the April 22 post that we were focusing on 1.40 (support at the time) and the 1.3915 level. Notice how the pair spent the majority of last week bouncing between these two areas.
The April 23 close meant that 1.40 would begin to attract sellers. Sure enough, both Wednesday and Thursday reached a high of 1.3997 before selling off.
Friday’s sub 1.40 close suggests the area will attract sellers if tested as new resistance. Key support for the week comes in at 1.3760 with a close below that exposing the 1.3600 handle.
The AUDUSD has taken a beating over the last couple of weeks. Just when it looked as though buyers were gaining some traction above 0.7750, sellers were there to cap any advance.
You may recall the trend line that extends from the 2016 low. I mentioned it way back on January 31 as the pair was approaching key resistance. You can see that commentary here.
From where I’m sitting, the AUDUSD broke that 2016 support level on April 23. The sub 0.7630 close made sure of that.
Sellers also managed to crack the 0.7640 horizontal level. You can see from the chart below how this area has served as a pivot since October of last year.
This breakdown leaves us watching for a retest of the 0.7630/50 area as new resistance. The next key support doesn’t come in until the 0.7500 handle which leaves us with plenty of room to work with.
Only a daily close (New York 5 pm EST) back above the 0.7650 area would negate the bearish outlook.
[thrive_custom_box title=”” style=”dark” type=”color” color=”#fef5c4″ border=”fadf98″]
Want to see how we’re trading this? Click Here to Join Justin and Save 70%
[/thrive_custom_box]
The NZDUSD is coming off a 340 pip slide that started April 13. In similar fashion to that of the EURUSD, GBPUSD and especially the AUDUSD, the New Zealand dollar has felt the effects of a strengthening USD.
As for the NZDUSD, the eight-day losing streak broke a significant support level. The 0.7180 handle served as the lower boundary of a 260 pip range that began in February.
However, the April 23 close brought an end to the sideways movement. It also exposed the next key support at 0.7050/60, which is an area I’ve had my eye on for quite some time.
Although you could try to buy the pair down here, I think the safer and more favorable play is to sell a retest of the 0.7180 area as new resistance. Whether or not buyers can manage a retest of this area is unclear, but that’s how I’m going to approach this.
Not only is 0.7180 a well-defined horizontal level, but it’s also very near the 38.2% Fibonacci level when measuring from the April 13 high to today’s low. This makes the area a bit more appealing to those interested in shorting the NZDUSD.
As you’d imagine, key support comes in at 0.7050/60. It’s going to take a daily close (using a New York close chart) below that to open the door to the next support at 0.6960.
The GBPJPY has been on my list for some time. In fact, ever since the pair broke below trend line support on February 7 I’ve been eyeing another opportunity to get short.
While I don’t believe the broader opportunity has materialized just yet, Friday’s selloff was impressive. It also cleared the short-term trend line I mentioned last weekend.
The “broader” opportunity I speak of consists of a close below the ascending channel support illustrated below. Only then can we say that the GBPJPY is on a crash course for much lower levels. For a better view of that channel, see this post.
For now, though, a retest of the 150.70 area should attract a few sellers. However, I’m not entirely convinced of the significance of this level just yet.
In my opinion, the GBPJPY (and other yen pairs) are gearing up for what could be a substantial move south. Whether it occurs next month or six months from now is unclear.
That said, channel support near 147.00 is a vital clue. If the GBPJPY moves to retest this area again over the coming weeks, it would suggest an imminent breakdown.
[thrive_custom_box title=”” style=”dark” type=”color” color=”#fef5c4″ border=”fadf98″]
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.
[/thrive_custom_box]
