EURUSD continued its climb higher last week after finding support at the key 1.1060 handle. This came after further action from the ECB on March 10th fueled a 400-pip rally that put the pair well above the area.
The coming week offers a fairly tight range between new support at 1.1210 and the February high at 1.1375. While bullish or bearish price action respectively from either level could present a favorable opportunity, a look at the movement since January of last year shows a directionless currency pair.
With this in mind, I continue to favor trading other pairs that offer more direction and thus, a greater separation between risk and reward.
Those intent on trading EURUSD can watch for either of the two aforementioned levels to generate a buy or sell signal. A close below 1.1210 would (re)expose channel support near 1.1150 while a close above 1.1375 would challenge the next level of resistance at 1.1470.
Despite last week’s rocky start, GBPUSD managed to finish the week in positive territory thanks to Thursday’s 230-pip gain. Not only was it an impressive single-session move, it also broke the 1.4400 resistance level by a considerable margin.
The pair successfully tested this area as new support early in Friday’s session, closing out the week just about where Thursday left off.
Moving forward, we should continue to see the 1.4400 handle attract buyers, which could eventually push prices higher into confluent resistance at 1.4670. This area is marked by the February high as well as trend line resistance from August of last year.
While the major trend remains bearish below the trend line shown below, last week’s bullish break indicates that we could see an additional 200 pips of upside before any meaningful offers come forward.
EURGBP came off nicely during Friday’s session after forming a bearish engulfing day on Thursday. The pair came within 10 pips of testing the 0.7840 handle as new resistance before deciding to head south for the remainder of the session.
As for the upcoming week, there isn’t much standing between current prices and the 0.7700 level. As shown in the chart below, this area has acted as key support and resistance since the third week in January and should therefore attract a strong bid if retested over the coming sessions.
That said, the bullish momentum that has been in place since December of last year has started to fade within the last few weeks. As such, I wouldn’t be surprised to see an eventual break below 0.7700, which would expose former lows near 0.7525.
GBPNZD remains one of my top prospects as we move into a new week of trading. The pair has now been consolidating for seven months since last August’s multi-year high.
This consolidation has formed a falling wedge, a price structure that is typically seen as a bullish continuation pattern. In the case of GBPNZD, this would make sense considering the pair is coming off a multi-year low from 2013.
Whether or not this particular formation will play out accordingly is yet to be seen. Only a daily close above the 2.1500 handle would confirm a breakout and expose the well-worn resistance level at 2.2400.
I mentioned EURCAD on Friday, noting how the pair has been carving out two ascending channels that could offer guidance as to the future direction of the cross.
The first channel dates back to August of 2012 while the second channel is much smaller with an inception date of April of 2015. See last week’s post for a weekly chart that shows both price structures.
The fact that the pair has struggled to find a meaningful bid following the massive 600-pip rally on March 10th should make any bull a bit nervous. While consolidation is typical after a large move, the pair hasn’t put up much of a fight against the former 1.50 support level aside from the March 10th retest.
With that said, there isn’t much to do here but to wait and watch how the pair continues to trade at current levels. A close below channel support would first expose the November/December 2015 lows near 1.4060.