EURUSD continued its grind higher with a 160 pip gain last week. Although the price action of late signals indecision at current levels, I remain cautiously bullish given the slow but steady push higher from the May low at 1.0818.
However the failed attempt at a close above 1.2750 last week indicates weakness and therefore negates the idea of a long position any time soon. At the same time the bearish side looks just as unfavorable as the pair continues to bounce back at every effort to push prices below 1.1200.
The lack of conviction one way or the other is keeping me sidelined for now. I also feel that any Euro strength may be better represented in something like EURCAD, which we will discuss shortly.
Summary: On the sidelines for now until a clear bullish or bearish setup presents itself. Key support comes in at 1.1050 while immediate resistance can be found at 1.1275.
GBPUSD worked well for us last week as the pair carved out profitable buy signals on June 9th and June 11th. The signals came as the pair managed to climb above two key levels at 1.5355 and 1.5500.
One thing I did mention on Thursday was the idea that the February high at 1.5550 might attract sellers to end the week. Sure enough the pair lost ground during the second half of Friday’s session, causing the pair to finish the week below the key level.
From here we could see an early retest of the 1.5500 handle which should continue to act as support. On the flip side, a daily close above 1.5550 would have us looking higher to the next resistance level at 1.5680.
Summary: Those still long from the June 11th pin bar can watch for a daily close above 1.5550 as an indicator that the uptrend is likely to continue. Immediate support comes in at 1.5500 with resistance coming in at 1.5680.
USDJPY has what is arguably the most confluent level at 122 than any other pair at the moment. Not only is this the March 2015 high, it also represents the 2014 high (albeit a bit lower at 121.84).
On top of that, this level is the 50% retrace from the swing low at 118.20 to the recent swing high at 125.85. If that weren’t enough it is also the 38.2 Fibonacci retracement from the swing low at 115.50 to the 125.85 swing high.
Needless to say this is an area with a huge amount of confluence and one that I will be watching with a lot of interest this week. Any bullish price action on a retest as new support could provide us with an extremely favorable buying opportunity.
Summary: Watch for bullish price action on a retest of 122.00 as new support. Key resistance comes in at 123.80 and 125.85.
As mentioned above, EURCAD is my favorite way to play any Euro strength at the moment. The inverse head and shoulders pattern that has been forming for the past three months has held up thus far and even began to look constructive during Friday’s session.
After attempting to break through trend line resistance on June 4th, the pair spent all of last week consolidating into what appears to be a bull flag pattern that is best seen on the 4 hour chart. Both the bull flag and larger inverse head and shoulders point to the same measured objective at 1.4490.
That said, the current picture does make it difficult to justify a long position, unless of course the market presents an opportunity on an early retest of the key support area between 1.3765 and 1.3800.
However the more prudent approach would be to wait for a daily close above trend line resistance before looking for a buying opportunity. If a break of this level occurs we could be looking at a run to 1.4490 over the next several weeks.
Summary: Although a retest of the area between 1.3765 and 1.3800 may provide a buying opportunity, a more conservative and more favorable approach is to wait for a daily close above trend line resistance before looking for a buying opportunity. Such a break would expose resistance at 1.4212 and 1.4340 with a measured objective of 1.4490.