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EURUSD broke a significant support level last week.
The 1.1180 level had supported the single currency since the beginning of March.
However, Wednesday’s 1.1152 close means that any retest of the 1.1180 area will likely encounter sellers.
We saw some of that occur on Friday.
After reaching a high of 1.1173, the EURUSD lost over 30 pips just before the weekend.
But that wasn’t enough for me to pull the trigger.
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First, the pair was still nearly 50 pips from the 10 and 20 daily EMAs even by Friday’s high. That alone suggests we could see another push higher this week.
Second, EURUSD didn’t quite retest the 1.1180 area. It came close, but I’d prefer to see a convincing test of the region as new resistance.
I would also be careful not to get too aggressive with shorts here.
If we see an immediate retest of 1.1180 as new resistance, it will signal there’s more demand below the area than shorts may want to see.
That’s why I always prefer to see a rounded retest of a key level.
I’m going to give the EURUSD some space for now. I’m in no hurry to get in this market or any other for that matter.
GBPUSD played out relatively well for shorts last week.
I wrote about the bearish inside bar on April 22nd.
The signal followed a break of channel support on the 18th. And despite some intraday strength on the 23rd, sellers played their part well.
I think GBPUSD has more downside potential, though.
Last week found support at the gap that formed between February 15th and 18th at 1.2885.
Whether or not that support holds is yet to be seen.
However, channel breaks like the one that occurred on April 18th tend to target the pattern’s inception point, or in this case the 1.2800 handle.
Key resistance for the week ahead comes in between 1.2980 and 1.3000.
And if sellers intend to force a retest of the February lows at 1.2800, they’re going to have to get past 1.2885 first.
USDJPY hasn’t been the most attractive market to trade.
The pair has gone nowhere fast since early March. Even the dip in the last two weeks of March was a bit confusing when put into context.
Now, I’m not saying the USDJPY is now a top trade idea by any means, but last week’s breakdown is somewhat intriguing.
First, the selloff that occurred on Thursday and Friday to some degree carved a bearish engulfing week at a swing high.
That could be indicative in and of itself.
Furthermore, Friday appears to have cleared a short-term support level that extends from the March 5th high.
The pair also cleared the trend line from the March low on Thursday.
All in all, things look relatively bearish for USDJPY moving forward.
If sellers can get behind this breakdown, we could see the pair move lower toward the next key support at 111.00 this week.
A daily close below that would open up the March low at 109.70.
Alternatively, buyers need to secure a daily close above the 112.30 horizontal level to negate the bearish scenario and keep the 2019 rally intact.
I’ve written about GBPNZD several times since March 26th.
I even commented last week that GBPNZD could be the top trade idea of 2019.
The technicals here are incredibly convincing, and the opportunity is one you probably don’t want to miss.
That said, there are no guarantees in this business.
So while the GBPNZD rising wedge below looks promising, there’s still plenty of time for the technicals to break down.
But as of Friday’s close, I think there’s a good reason to believe the pair is close to finally breaking wedge support near 1.9320.
Last week’s price action carved a bearish pin bar of sorts which may hint at future weakness.
The pair also retested a key weekly area at 1.9570 last week.
This area has been a factor since late 2017. It’s also the 61.8% Fibonacci retracement of the impulsive selloff between October and December of last year.
Be sure to see my April 26th post for all the details.
In early April, WTI cleared rising wedge resistance near 61.60.
The market went on to carve two new swing highs above the 63.60 region.
However, like most upward breaks of ascending patterns, it didn’t last.
As of Friday’s close, the last three weeks of movement are nothing more than a false break.
Even the weekly time frame shows a bearish engulfing pattern.
In fact, this last week’s candle engulfed the previous two weeks.
Crude oil is also back below the 64.00 handle which served as key support for the market in June and August of last year.
Any retest of the area between 63.20 and 63.60 this week is likely to attract sellers.
With that in mind, I favor selling WTI for what could be a substantial move lower.
How low, exactly?
It’s difficult to say, but as long as oil is below 63.60 resistance on a daily closing basis, the 60.30 area is exposed followed by 58.20 and 55.40.
And if the market treats this as a rising wedge, it puts the objective at the pattern’s inception point or 42.45.
Buyers would need to secure a daily close back above the 64.50 area to negate the bearish outlook.
Justin Bennett is an internationally recognized Forex trader with 10+ years of experience. He's been interviewed by Stocks & Commodities Magazine as a featured trader for the month and is mentioned weekly by Forex Factory next to publications from CNN and Bloomberg. Justin created Daily Price Action in 2014 and has since grown the monthly readership to over 100,000 Forex traders and has personally mentored more than 3,000 students.Read more...
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