That rebound, by the way, started from 1.1830, which was one of the levels I mentioned last Sunday.
Friday’s commentary focused on whether or not buyers could close the session above 1.1930 or not. The level was a significant factor between November 2017 and January 2018, so Friday’s price action was a crucial moment for buyers.
Now, you may be wondering why I haven’t labeled 1.1930 as support or resistance in the chart below. The reason is that last week’s final print is too close to call. I like to think of key levels as areas, and Friday’s close is within the 1.1930 area.
That means the EURUSD could go either way this week. However, the uncertainty is nothing a little patience can’t cure. My guess is that we’ll have an answer to whether or not buyers cleared the 1.1930 region within the first 24 hours of this week.
For now, though, I’ll wait to see what Monday’s close brings. I’m in no hurry to trade this one, and I’m more interested in selling the Euro at higher levels than buying it down here anyway.
The GBPUSD was uneventful last week, to say the least. In fact, after five days of trading, the pair closed the week just five pips above its opening price of 1.3533.
Last Sunday I pointed out 1.3600 as the resistance level to watch. Sellers played their part well only allowing buyers to see a high of 1.3617 briefly during Thursday’s session before forcing a 1.3515 close.
That same session carved the weekly low at 1.3459, which is just two pips above the current 2018 low.
Those two levels, 1.3460 and 1.3600 give us a range to keep a close eye on for the week ahead. While I’m not interested in trading the range, I am awaiting a daily close (New York 5 pm EST) below 1.3460 or above 1.3600.
If I were forced to choose the one that’s more likely, I’d have to go with a break lower given the recent selloffs. But as always, it’s best to let the market make the first move.
A daily close below 1.3460 would expose the next key support at 1.3300. Alternatively, a close above 1.3600 would target the February and March lows at 1.3760.
Despite last week’s rally attempt, USDJPY buyers weren’t able to do much with the bounce from the 108.50/80 support area I mentioned last Sunday.
They did, however, manage to retest the previous May swing high at 110.00. And if you look closely at the 4-hour chart below, you’ll notice that both rejections (the 2nd and 10th of May) carved bearish pin bars.
We had a discussion inside the member’s area on Friday about whether or not USDJPY bears had broken trend line support. At the time, it looked as though they had. However, Friday’s close tells a different story.
I’m always particularly cautious of Friday breakouts. The lack of volume compared to the middle of the week doesn’t inspire much confidence, and often results in lackluster follow through.
It’s also sometimes necessary to redraw your levels based on what the market is telling you. In the case of the USDJPY, it’s telling me that sellers haven’t broken through just yet.
As such, I’ll be keeping this one at the top of my watch list. A close below trend line support followed by a retest of the area as new resistance could offer a favorable opportunity to get short.
Key support below that comes in at 108.60 followed by 107.40/70. Alternatively, a move back to 110.00 would likely encounter an influx of selling pressure.
The GBPJPY continues to hover just above ascending channel support that extends from the 2017 low. I’ve had my eye on this level since the pair started to break back below 150.70 on April 27. We discussed that in the April 29 forecast.
Last Sunday I pointed out the 148.50/60 resistance area. Here’s what I wrote:
Apart from 150.70, attempting to identify horizontal levels on the GBPJPY can be challenging. That said, I do believe that 148.50/60 could attract an influx of selling pressure if tested as new resistance.
Although GBPJPY bulls extended both Wednesday and Thursday above 148.50/60, the area held on a daily closing basis.
Remember, I use New York close charts that give me five 24-hour sessions in a week. You can go here to get access to the same charts I use.
So, after 120 hours of trading, we’re right back where we started last Sunday. As long as the 148.50/60 area holds as resistance on a daily closing basis, the GBPJPY is vulnerable.
However, it’s going to take a daily close below channel support at 147.20/40 to expose downside targets. More on those levels when sellers get the job done.
On Thursday I pointed out a multi-year ascending channel on the EURCAD. The lower boundary at 1.5200 had just come under pressure, yet buyers were still holding their ground.
Here’s what I wrote on Thursday:
As long as long-term channel support just above 1.5200 holds on a daily closing basis (using a New York close chart), the pair will remain well bid. Key resistance from here comes in at 1.5370.
However, if buyers lose the 1.5200 handle on a daily closing basis, we could see the EURCAD start to slip once more. Key support below 1.5200 comes in at 1.5000 followed by 1.4730/40.
The EURCAD closed Thursday’s session at 1.5210. Based on what I wrote above, that meant the multi-year ascending channel was still intact. Sure enough, buyers followed through on Friday, taking the pair as high as 1.5287.
This leaves us in a similar situation to that of the GBPJPY above. A retest of 1.5370/80 would attract sellers while a daily close (New York 5 pm EST) below 1.5200/30 would expose lower levels.
I’ll be keeping an eye out for either scenario. That said, a retest of 1.5370/80 would need to be accompanied by bearish price action to pique my interest.