EURUSD is becoming more interesting by the week.
Not because it’s producing a plethora of favorable setups. Far from it, in fact.
But because the longer term technicals are starting to come together in a way that could trigger a significant move later this year.
Now, I’m by no means bullish EURUSD.
I want to get that out of the way first. The pair has been trending lower since this time last year, and I have no reason to suspect a reversal is imminent.
In other words, if you’re going to trade EURUSD, shorts continue to be the preferred method unless you don’t mind countering the trend.
The only way that will change for me at least is a daily close above wedge resistance near 1.1340.
I wrote about the EURUSD falling wedge last week.
If confirmed, that pattern could surprise a lot of traders later this year.
But until buyers confirm the pattern with a close above wedge resistance, the structure is meaningless; it’s just two lines on a chart.
I will remain bearish the EURUSD for now. However, I’m also respecting the potential for a bullish move later this year.
Immediate support for the week ahead comes in at 1.1170 with resistance up near 1.1340.
I dislike just about everything that’s happening with GBPUSD.
I know that isn’t the most appealing or exciting intro, but it’s the truth, and I like to be transparent about these things.
GBPUSD has struggled to respect key levels for several weeks now.
In fact, this sporadic behavior has been going on for months. And unfortunately, I don’t see an end in sight.
As long as the Brexit saga drags on, GBPUSD is going to be a difficult pair to trade.
That doesn’t mean you can’t trade it, but I am suggesting that there may be more favorable options out there.
For instance, the technicals on the four other currency pairs in today’s commentary are far more favorable in my opinion.
But as always, you need to come to your own conclusions.
Horizontal support for the week ahead comes in at 1.2930. However, there is a trend line near 1.2980 that could attract a few bids as well.
The 1.3200 area is what I’m using for resistance at the moment.
That said, I would not attempt trading GBPUSD from any of these levels without confirming price action.
I wrote about USDJPY on Friday before the week closed.
The idea was to watch for a daily close below rising wedge support near the 111.00 handle.
It was a follow-up to the March 5th sell signal from the 112.00 resistance area.
However, sellers couldn’t quite get the job done before Friday’s 5 pm EST close. And as I wrote on Friday, that may keep buyers in control a while longer.
But if this truly is a rising wedge, USDJPY is running out of real estate.
The pair is going to be forced to make a decision within the next few weeks.
In fact, we may even get a decisive move this week.
One could also keep an eye on the S&P 500 for clues given the positive correlation between the two markets.
The S&P sold off nicely last week following my March 6th commentary.
However, the relatively bullish Friday candle (on the S&P 500) may trigger some buying this week that could spill over into the risk-sensitive USDJPY.
I’ll be keeping a close eye on this one throughout the week. A daily close below the 111.00 would be bearish, but buyers may not be done just yet. We’ll see.
Key resistance for the week ahead comes in at 112.00.
GBPAUD tested a significant resistance area last week.
On Monday I pointed out the 1,440 pip range here. Resistance is located at 1.8720 while support is near 1.7280.
When I wrote Monday’s post, GBPAUD was starting to come off resistance.
However, it took a second retest of the 1.8720 resistance area before sellers were ready to regain control.
If you missed out on Friday’s 200-pip drop, there’s no need to panic.
It’s only my opinion, but GBPAUD looks ready to test channel support near 1.8300 this week.
And that might be the beginning of a much larger move south.
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I favor channels for a few reasons. One of those reasons is that they are an excellent barometer of trend strength.
Let’s use the GBPAUD ascending channel below as an example.
Notice how the pair has tested both support and resistance on multiple occasions.
In late January, buyers carved a higher high and also managed to tag channel resistance at 1.8520.
That was a sign of strength.
Fast forward to this latest higher high in late February and March.
So far, buyers have not managed another retest of channel resistance. That’s partly because of the range ceiling at 1.8720 I mentioned earlier.
But it could also be an indication of weakness.
The key will be to watch how GBPAUD reacts at channel support this week and whether or not buyers can muster another leg higher.
If the pair challenges support before reaching back to the 1.8720 resistance area, I would argue that a breakdown is imminent.
And if GBPAUD closes the day below channel support, it would expose the next key area at 1.7740 and perhaps even the range floor at 1.7280.
Alternatively, a daily close above 1.8720 would expose ascending channel resistance.
On February 20th I discussed a potential short setup on gold (XAUUSD).
The market was in the process of testing a key resistance level at 1345.
It turns out that February 20th session carved a bearish pin bar at resistance.
That was the first sell signal.
The second indication of weakness materialized on the 28th of February.
Gold was testing wedge support at the time and went on to close the day well below it.
My target for gold was the wedge inception point at 1280.
Here’s what I wrote on February 28th:
If sellers manage a daily close (New York 5 pm EST) below 1318, we could see gold slide lower toward the 1300 support region.
In fact, if 1318 gives out this week, I would suspect we will see gold move lower toward the wedge inception point at 1280.
Sure enough, gold reached a low of 1281 on both Tuesday and Thursday of last week.
I know of several Daily Price Action members who caught both sell signals for a hefty profit.
Friday’s bounce puts the 1300 handle in the crosshairs for the week ahead. Of course, this time the area will likely attract sellers.
I wouldn’t trade this without some form of bearish price action though. It’s too risky otherwise.
Any rejection from 1300 would re-expose 1280. Alternatively, a daily close above 1300 would open the door to the next key resistance at 1320.