A lot of potential setups to cover from yesterday’s price action so let’s jump right in…
AUDCHF was the trade setup I was most interested in last week and sure enough the bulls came through on Friday, pushing the market higher by 67 pips from channel support.
This was a essentially a breakout trade that had price action confirmation in the form of a bullish pin bar. Friday’s low retested previous channel resistance which is now acting as support. All in all this was a textbook price action setup.
From here the year high around .8480 should act as resistance. If the market can break through this level the next key resistance comes in at .85. This is an important psychological level as well as two lows from October and November of last year.
CHFJPY was another pair we discussed in detail last week. We were looking for a break of the 113 support level which we got on Thursday. As expected, the market came back to test this level as resistance yesterday and formed a bearish pin bar in the process.
This wouldn’t be considered a reversal pin bar but I would certainly call this a continuation pin bar. Depending on how the market opens and trades on Monday I may look to sell a rally back to resistance.
From here the next key support level appears to come in at 111.70.
EURUSD put in a bullish pin bar on Friday that’s getting a lot of attention. But here’s why I’m not touching this market right now…
A long trade here would be going against the trend, which has been down since early May. Watching for a sell signal around 1.3585 is a better option, however that trend line from July of 2012 is too close for comfort. See the weekly chart below.
That said, I’m sitting this one out. There is also a strong case to be made for the potential double bottom around 1.3515, which is another reason I won’t be looking to sell this market any time soon.
EURUSD weekly chart.
Last but not least is GBPUSD. Similar to EURUSD, this pair produced a bullish pin bar on Friday at a key level. The question we have to ask ourselves is, is it worth the risk?
In my opinion, no it isn’t. I’d like to see a larger pullback into support before going long. As it is this pin bar seems to be “floating” even though it did occur at support.
Ideally I would want to see this market pull back to 1.697 before looking for a long entry. This level marks the intersection of the May high with trend line support from November of last year.
There’s a good chance that the market will rally back to the 1.7175 area in the coming days, but I’ll hold out for more favorable opportunities.
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