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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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EURUSD bulls managed to push prices higher last week, but the conviction is lacking in my opinion.
I pointed out the 1.1720 horizontal level a couple times last week. You can see how it was serving as resistance between May 31 and June 5 before the single currency closed above it on the 6th.
That session close at 5 pm EST (remember, I use New York close charts) was the only invitation buyers needed to force a retest of the 1.1830 area.
It’s no surprise that sellers came out to defend 1.1830 during Thursday’s session. However, what was a bit surprising was how quickly they were able to force a retest of 1.1720 as new support on Friday.
Friday’s relatively aggressive move back to 1.1720 is what would have me questioning my bias if I were bullish (which I’m not).
If you drop to the 4-hour time frame, you’ll notice there’s a short-term trend line support that extends from the May 30 low. If you attempt to draw this as a channel, you’ll quickly see that buyers are having a tough time getting back to resistance which was closer to 1.1880 last week.
I’ll write a more detailed post this week provided things don’t fall apart before then.
For now, it comes down to 1.1720 support and 1.1830 resistance. A daily close below 1.1720 would re-expose the trend line that extends from the 2017 low. Alternatively, a daily close above 1.1830 would expose the next key resistance at 1.1940.
Similar to the EURUSD, the GBPUSD is caught in a range. Following the June 1 close above 1.3300, buyers swooped in to support prices between the 4th and 5th; no surprise there.
That exposed the 1.3460 resistance level which was tested as such on Thursday. This is a level I’ve had on my chart for some time now.
For the week ahead, a daily close above 1.3460 would expose the next key resistance at 1.3600. This area served as the range top between the 9th and 14th of May.
Alternatively, a daily close back below the 1.3300 handle would turn our sights back to the current 2018 low at 1.3204.
The AUDUSD completed a textbook retest of support turned resistance last week. I first mentioned this trend line on April 24. We didn’t know it at the time, but it would take the pair six weeks to retest that broken level as new resistance.
Although the AUDUSD plunged below 0.7580 briefly on Friday, the level is holding as support on a daily closing basis. I pointed out the 0.7580 handle in Thursday’s post.
However, I would be surprised if Friday’s bounce from 0.7580 becomes anything more than temporary relief. In my opinion, the retest of 0.7670/80 last week was a significant development and one that could propel the AUDUSD lower in the weeks to come.
Last week’s long upper wick on the weekly chart also supports a bearish outlook. That said, with 0.7580 still intact as support we could see some strength in the near-term.
It’s going to take a daily close (using New York close charts) at 5 pm EST below 0.7580 to expose the next key support at 0.7410.
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Similar to the AUDUSD above, the GBPJPY also completed a textbook retest of support turned resistance last week.
On Tuesday, I published commentary about how the risk-sensitive cross was retesting 147.00 as new resistance. However, I didn’t see an opportunity to go short just yet so I decided to wait.
Here’s what I wrote on Tuesday:
As you can tell, there are a couple ways to interpret the GBPJPY at the moment. When faced with uncertainty like this, I’ve found that the best course of action is to wait it out.
That turned out to be the right call considering the pair rocketed 160 pips higher over the next 48 hours.
You may also recall that I had my eye on the 148.00 handle. This was support turned resistance based on the twelve-month ascending channel we’ve been discussing for weeks.
Here’s an excerpt from Tuesday about the 148.00 level.
You may recall my posts on this pattern, including the one from May 4 as well as just about every weekly forecast for the past six weeks. A market will often need to retest the broken support level as new resistance before continuing lower.
If that ends up being the case here, it would suggest a move above 147.00, perhaps up to the 148.00 area. That is unless the 147.00 area can attract enough selling pressure over the next few sessions.
Thursday’s session reached a high of 148.11 before plummeting just over 200 pips in less than 48 hours. Based on the price action in the final two sessions last week, I’d say sellers are out to defend old support as new resistance in the 148.00 region.
Now, the GBPJPY did close Friday’s session just below the 147.00 handle. The area has been significant since October of last year and could attract sellers early this week. The question is, was Friday’s break of 147.00 convincing enough to keep the bearish momentum intact?
Key support comes in at 144.00. I’ve illustrated this level in just about every GBPJPY chart for the last two months, and so far it’s holding on a daily closing basis (New York close charts).
On Friday I mentioned a 4-hour ascending channel on the NZDCAD that could produce a selling opportunity this week. I also wrote that a breakdown was imminent despite the fact that prices were still above channel support at the time.
The pair’s failure to retest channel resistance on June 5 was the first sign of weakness. Buyers only missed the level by a few pips, but it still suggested that momentum was slowing.
The second sign and the one that ultimately led to Friday’s breakdown was the pair’s repeated retests of channel support. Whenever a market begins to lean on a level in this way it usually means a breakout is just around the corner.
For the week ahead, I’d expect any retest of the 0.9110/20 resistance area to attract sellers. As long as it holds on a 4-hour closing basis, the NZDCAD is vulnerable.
Key support comes in at 0.9000. It’s difficult to see on the 4-hour time frame, but a glance at the daily chart and you’ll notice how significant this level has been since late 2014.
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