Watch the video below to see how I’m trading EURUSD, GBPUSD, USDJPY, AUDUSD, and GBPJPY for the coming week.
Be sure to also scroll down for my commentary and annotated charts.
I wrote about the EURUSD 1.1030/60 resistance area on September 4.
The area served as support during the second half of August, so it was logical to assume sellers would want to defend it as new resistance.
Thursday’s rally encountered sellers just above 1.1060.
After a 70-pip gain, the EURUSD sold off in the afternoon for what was essentially a breakeven close.
But I wasn’t interested in selling.
In fact, I’m still hesitant to get bearish here for the reasons I outlined in my September 6 post.
The bottom line is that, given the broader descending channel that began late last year, the EURUSD has more room to move higher than lower.
Now, that does not mean the euro won’t lose ground this week.
I don’t know where the EURUSD is going; nobody does.
However, I also don’t want to get too bearish on a market that just bounced from a twelve-month support level.
I would rather wait and see how the euro reacts to the area between 1.1060 and 1.1100 this week.
Constant bullish pressure on that area would indicate an imminent break higher.
On Wednesday I wrote about a GBPUSD breakout.
The close above channel resistance at 1.2230 was something I pointed out as a possibility several times in the last couple of weeks.
Given Wednesday’s breakout, we were looking for buyers to defend the 1.2200/20 area as new support.
Thursday’s low was right in the middle at 1.2209.
What followed was an aggressive bullish move up to 1.2353.
Although GBPUSD bulls didn’t quite reach the next resistance level at 1.2380, they are well on their way.
I’m not seeing any signs of weakness despite the latest three-day 400-pip rally.
Friday’s session closed red, but so far, it’s just consolidation.
You can see how Friday’s candle fits neatly within Thursday’s range.
The consolidation also occurred within the upper half of Thursday’s candle, which is a positive sign for buyers.
But that doesn’t mean GBPUSD won’t pullback this week.
We could still see a rounded retest back to the 1.2200 support area before the next leg higher begins.
Keep in mind too that nothing is certain.
Just because GBPUSD buyers won the battle last week doesn’t mean they will manage to push prices even higher this week.
That’s important to remember, especially while position sizing to keep emotions at bay.
That said, as long as buyers keep GBPUSD above 1.2200 on a daily closing basis, I have to respect the possibility of a move higher this week.
Remember that I use New York close Forex charts so that each 24-hour session opens and closes at 5 pm EST.
USDJPY buyers finally broke that 106.80 level last week.
I’ve been writing about it since August 14 shortly after the pair bounced from the 105.00 support region.
Given the fact that USDJPY was trading just above 105.00 throughout August, I had no interest in selling the pair.
I also felt that a break above 106.80 was imminent last week given the higher lows that formed just below the area.
For now, channel resistance at 108.00 is exposed.
But the relief rally now depends on buyers keeping the price above 106.80 (new support) on a daily closing basis.
That means if we see USDJPY close below 106.80 at the New York 5 pm EST close, we’ll likely see prices unwind back toward the 105.00 support area.
That said, as long as the pair remains above 106.80, I have to respect the potential for a move to 108.00.
AUDUSD bulls were on the move last week in a big way.
The pair not only gained 170 pips in four days, but it also closed the week above the 0.6820 area.
You can see how this level served as resistance in early August.
As such, any retest of this area as new support is likely to encounter buying pressure.
I also think the 0.6830 level could become a factor this week.
Notice how 0.6830 was the June 18 low. It’s also the September 5 high from last week.
That gives us a support area between 0.6820 and 0.6830.
As long as that region holds as new support on a daily closing basis (using a New York 5 pm EST close chart), the AUDUSD is headed higher.
As for key resistance, I would keep a close eye on 0.6900/10.
If buyers can break that, we could see AUDUSD tag descending channel resistance up near 0.6950 over the coming weeks.
Alternatively, a daily close below 0.6820 would be a sign of weakness. It would also expose the confluence of support at 0.6690.
The GBPJPY carved its first higher high last week since March.
The question now is whether buyers can keep the pair above new support at 129.70 on a daily closing basis.
If they can, we’ll see GBPJPY put in a higher low.
Although it wasn’t a huge factor last week, buyers also broke the trend line that extends from the May high.
That’s one more indication that GBPJPY bulls want to take the pair higher.
However, I think the more important factor here is last week’s higher high and whether or not the pair can carve a higher low this week.
Key resistance for the week ahead comes in at 132.20.
Break that and we could see GBPJPY trend higher toward the 135.40 area.
That area, by the way, is very near the 38.2% Fibonacci retracement of the year-to-date range.