EURUSD had another banner week, extending the two-week rally by an additional 213 pips. Surprisingly, last week’s close marked the first consecutive weekly gain for the single currency since mid-March.
Friday’s session broke the five-day win streak for the pair but more importantly, buyers appear to have lost their grip on former channel support that extends from the December 2015 low.
This level intersects with 1.1355, which was a key pivot for the pair between February and May of this year. Only a daily close above this level would expose the pre-Brexit high at 1.1427. Meanwhile, a confluence of support comes in at 1.1200.
I’m staying on the sidelines until a favorable opportunity presents itself.
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GBPUSD bulls managed to reclaim the 1.3050 handle last week after an aggressive Tuesday rally left the pair just a handful of pips below the critical level.
Although the pound lost some steam on Friday, the pair found a bid just in time to close the week above the former resistance level.
However, the bullish scenario is overshadowed by Friday’s bearish engulfing candle. So although GBPUSD held above 1.3050, it isn’t enough to make me a believer that higher prices are in the cards this week.
The conflicting signals leave me with a neutral bias, which is just as well considering the directionless price action that has plagued this market since the June 24th Brexit.
AUDUSD closed below a critical level at 0.7646 last week. This area served as the June high and also attracted offers during the mid-July rally.
Friday’s break of support could be a hint of additional weakness over the coming sessions. However, given the three-month uptrend, it’s all a bit controversial without the presence of a proper bearish signal from the new resistance level.
A move lower would encounter support at the 0.7500 handle, an area that served as a key pivot between June 9th and August 2nd.
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USDCAD sold off heavily at the beginning of last week, declining more than 200 pips before finding support at 1.2762. The bearish momentum came after the pair closed below the key 1.30 handle, a level I mentioned on August 11th.
Friday’s rebound managed to take out the previous day’s high but did lose some ground into the close. The current area of resistance is rather large between 1.2845 and 1.2890, which represent the opening and closing prices of the gap from mid-June.
I remain short from 1.2981 with a target of the current 2016 low at 1.2460. My bias will remain intact so long as the pair trades below 1.2890 on a daily closing basis.
However, even a move above this area would encounter firm resistance at the 1.30 handle.
NZDCAD reminded traders last week why a breakout isn’t complete without a close beyond the level in question. I mentioned this ascending channel on Thursday, noting that a 4-hour close below support would expose the 0.9090 area.
Shortly after releasing that commentary, the pair looked ready to breakout. However, buyers came to the rescue just before the 4-hour candle closed, thus eliminating the potential selling opportunity.
Since that time NZDCAD has managed to rally 70 pips and is set to begin the new trading week safely above support.
My bias hasn’t changed since last Thursday’s commentary.
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