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Price Action Setups: EURUSD Set For a Reversal?

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I think it goes without saying that EURUSD stole the show today. Even by late morning the pair was trading well below recent consolidation, but then recovered nearly 160 pips to close the day above the consolidation area.

Today’s price action is very similar to the bearish pin bar on May 5th. This isn’t to say that it will play out exactly the same, but formations like this do repeat themselves so I wouldn’t be surprised to see a strong rally from here.

Because the low of today’s bar is so far away, the only safe way to play this would be with a limit buy order around 1.36 (1.359 is the 50% retrace from today’s low to the high).

Having said that, the highs from the recent consolidation area should provide strong support around 1.364. This leads me to think that we may not see the large retrace many are probably expecting. This would also be similar to the drop that followed the bearish price action on May 5th.

The next key resistance level comes in at 1.3690.

eurusd daily forex chart

I mentioned in yesterday’s post that this level would be one to watch on AUDCAD. Instead of getting a price action signal to go short, the pair broke through trend line resistance with conviction.

From here we could see the market retrace to the 1.015 level before continuing higher. This isn’t one of my favorite setups on the day, but it could become interesting with the right price action signal at this level.

audcad 4 hour forex chart

I tweeted yesterday about the GBPJPY 4 hour bullish pin bar that formed shortly after breaking channel resistance. These formations can often lead to a strong push higher. Although not an overly strong move, GBPJPY has managed to push about 50 pips higher since the break.

Today the pair showed further bullish price action, closing above support. All signs at the moment point to a retest of former resistance around 173.10. Just keep in mind that GBPJPY is a volatile pair and has been known to false break.

gbpjpy price action

NZDCHF tried to regain its footing today but wasn’t able to rally as much as the other New Zealand pairs. This gave us a well-formed bearish pin bar below two levels of resistance.

We may see the market rally some from here before a potential retest of former support at .7485.

nzdchf daily forex chart

Leave a Comment:

8 comments
Colin says

Great trade ideas, analysis Justin – guess we will see how things play out next week. Eur/usd should be interesting. thanks for the info 🙂

Reply
    Justin Bennett says

    Thanks, Colin. EURUSD still looks constructive from here, although the lack of volume isn’t helping any rally effort. I’ll try to get Friday’s analysis up today.

    Reply
      Colin says

      Yep kinda stalled out but see what happens in the first 24/36 hrs of the new week.

      What’s yer thought on the aud/jpy? Could be a solid level for a reversal providing price action this week coughs up actual signal?

      Reply
        Justin Bennett says

        Could be interesting with the right price action signal. I do like a horizontal level at 96.10 better than the trend line, however.

        Reply
Lloyd says

What do you think about the bullish inside bar on the eur/jpy?

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      james says

      hi Sir , I came across your site & read your commentary on EURUSD on 5 june , assuming an buy limit order had triggered , your RW is always at least 1:2 , now that price had not reach & even come back to original entry level
      what should be done . hold on or exit ,since 1.3691 seems to be a strong resistance at current market . Thanks & regards!

      james

      6/7/2014

      Reply
        Justin Bennett says

        Hi James,

        I didn’t trade that EURUSD setup on June 5th. Obviously it’s your decision, but if it were me I would probably exit the trade after the market wasn’t able to break the 1.369 resistance level.

        The weekly chart is also turning bearish (MAs crossed and bearish pin of sorts off of the 1.369 level)

        Hope that helps!

        – Justin

        Reply
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