I flipped from relatively bearish the EURUSD to bullish in mid-November.
The aggressiveness of the bounce at 1.1215 followed by the daily close back above 1.1300 caused me to question my bearish outlook.
In fact, I even went long on November 16th at 1.1335.
That came to an abrupt end on the 20th. Instead of catching a bid at 1.1430 (new support), the pair closed the day at 1.1369.
I exited my long position as soon as sellers took out the November 19th low.
I figured there was a very good chance sellers were on their way to carving a bearish engulfing day on the 20th. Sure enough, they did.
My early exit left me with a decent profit but it wasn’t what I was looking for.
But as every good trader knows, flexibility is essential in this business.
You have to be able to flip from bearish to bullish and back again in the blink of an eye.
If you can’t, you’ll be left hoping for an outcome the market doesn’t care to deliver.
So what’s the plan for EURUSD this week?
It seems the single currency is back within its former range between 1.1300 support and 1.1430 resistance.
There is a slight chance that the price action since late October is an inverse head and shoulders.
However, buyers have their work cut out for them. So for now, that’s an idea I will monitor but I won’t act on as long as the 1.1430 resistance area stands.
I do expect to see buyers put up a fight at 1.1300. Just keep in mind that any buying here is counter-trend.
Below 1.1300 we have the year-to-date low of 1.1215.
The GBPUSD continues to be one of the less desirable currency pairs to trade in my opinion.
On the one hand, you have the increase in volatility due to ongoing Brexit rhetoric.
That alone can make trading the pound trickier than usual.
But more importantly is the fact that GBPUSD is technically unattractive.
While the downtrend that began in April is intact, the pair has been sideways since mid-August.
If you prefer trading ranges, the 560-pip range between 1.2700 and 1.3260 might be an option for you.
However, given the series of lower highs this month, I’m not sure how much longer buyers can hold onto the 1.2700 support area.
With that in mind, I have no intention of trading GBPUSD as long as 1.2700 is intact.
If sellers can clear it on a daily closing basis, we may have a short opportunity.
Just keep in mind that the Brexit saga isn’t going away anytime soon.
I wrote about CADJPY last week. At the time, the pair had just retested ascending channel support near 84.70.
The idea was to wait for a daily close below the level before considering a short.
As you can see, buyers defended the 84.70 area on Wednesday which means our short idea hasn’t materialized just yet.
But Wednesday’s bounce does offer a clue.
It tells us the market is paying attention to this channel or at least the bottom portion of it.
That’s useful information.
If market participants are treating this level as support, a close below it means any retest will likely attract sellers.
In other words, it would become support turned resistance.
That’s basic technical analysis, but it’s also all you need to do well in this business.
For now, CADJPY needs more time. If sellers can secure a daily close below channel support near 84.80/90, it would open up downside targets.
Those targets include 83.90 followed by 82.30.
The final retesting place following a break below channel support could be the year-to-date low at 80.50.
On November 12th I discussed a potential short opportunity on EURNZD. Sellers were targeting 1.6570 after breaking below key support at 1.6800.
At the time, the euro cross was trading just above 1.6700. But instead of retesting old support as new resistance, EURNZD bears took the price straight to 1.6570.
Unless you sold as soon as I released that November 12th commentary, you most likely missed the move.
However, as is often the case, we may have a second opportunity.
Notice how EURNZD has recently rebounded from the 1.6570 area. Since then, buyers have managed to claw back 200 pips.
That means the market is now less than 100 pips away from new resistance near 1.6830.
That’s the area I’ll be watching this week. Bearish price action from the 1.6830 resistance area could trigger the next leg lower.
As long as 1.6830 holds as new resistance on a daily closing basis, the breakdown I mentioned on the 12th is in play.
Are you using the wrong charts? If the daily time frame doesn’t close at 5 pm EST, you aren’t using New York close charts which are essential for trading price action.
Key support comes in at 1.6570. A daily close below that would expose the September 2017 low at 1.6150.
That 1.6150 level, by the way, is the final target for this upward sloping flag.
At nearly 700 pips, the target offers plenty of room to run, but will also require immense patience if you intend to hold short for several weeks.
Gold bulls have managed to keep their heads above water this month. At least so far.
Back on November 14, I discussed why the 1200 handle was so significant.
Not only was it support that extends from the year-to-date low, but it was also the bottom of a short-term ascending channel.
That channel, by the way, could be a bearish flag pattern. If it is, the target could be as low as the 2015 low of 1045.
Be sure to review my post from November 14 for all the details.
Unsurprisingly, gold bulls stepped in at 1200. They even closed the market back above 1215 on the 16th.
One thing they haven’t done is take out the October high at 1243.
As long as that high stands, the targets from my November 14 post shouldn’t be dismissed.
I’m not claiming this is a continuation pattern just yet. Sellers need to take out channel support below 1215 first.
But I’m also not ready to rule it out.
For the week ahead, key support comes in at 1215 while resistance can be found up near 1235.