[thrive_custom_box title=”” style=”dark” type=”color” color=”#fef5c4″ border=”fadf98″]
Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.
Click here to get access to the same style charts I use on this website.
[/thrive_custom_box]
The EURUSD did something last week it hasn’t done since December 18. The trend line that extends from the April 2017 low has now been tested on two separate occasions after forming on November 7 of last year, with the most recent being Thursday and Friday of last week.
Buyers were able to hold prices above the level on a daily closing basis last week, which means the support level is still very much intact.
However, as I’ve mentioned for several weeks now, I’m not interested in trading this consolidation. I’m much more interested in a break below the April 2017 trend line or above the 2008 level shown in the chart below.
As long as trend line support near 1.2240/50 holds on a daily closing basis, the 2008 trend line remains exposed. At the moment that level comes in near 1.2440.
Alternatively, a close below 1.2240 would expose 1.2160 followed by 1.2090. However, if the EURUSD does break trend line support over the coming sessions, I’m anticipating a move to 1.1930 and perhaps even 1.1700.
Last week’s price action on the GBPUSD is the perfect example of why I haven’t been very active lately. The pair spent the entirety of last week trading in a 90 pip range, which doesn’t leave much room for favorable entries.
Moreover, the pair has been directionless since topping out in late January. There have been a couple of opportunities since then, but overall it’s been a tug-of-war match between buyers and sellers.
If the GBPUSD can manage a daily close (using a New York close chart) above 1.4090 this week, we could see a move to the March high at 1.4240. Alternatively, a daily close below 1.40 would expose the 1.3910 area.
The USDJPY gained additional ground last week after closing above the short-term trend line from the February 21 highs.
However, not long after the pair encountered selling pressure at 107.40. The weakness carried over into Friday’s session, yet the pair managed to stay above the short-term trend line support near 106.60.
I do think we could see some additional upside here, but I’m not interested in selling the yen. Based on what I see with other yen pairs and risk assets as a whole, I can’t get behind the idea of an extended risk-off move.
Of course, it doesn’t mean the USDJPY can’t trend higher from current levels. As long as the pair trades above the 106.60 area, that’s a distinct possibility. However, it’s going to take a daily close above last week’s high near 107.40 to open up the next key resistance at 108.50.
[thrive_custom_box title=”” style=”dark” type=”color” color=”#fef5c4″ border=”fadf98″]
Free Webinar: Learn how I trade pin bars, draw key levels, and much more!
[/thrive_custom_box]
On April 4 I pointed out an ascending channel that had formed on the CADJPY 4-hour chart. At the time, the pair was trading just below resistance at 83.40.
However, just a few hours later the pair closed above ascending channel resistance.
It wasn’t a buying opportunity as one of my rules when trading channels is to never buy an upside break of an ascending pattern. The same holds true for selling a downside break of a descending pattern.
The final hours of Friday’s session were a prime example of why I avoid these situations. In many cases, an upside break like this one on the CADJPY can produce a selling opportunity following a close back inside of the channel.
I’m not convinced that has occurred just yet. The final print on Friday was close, but I’ll wait to see how the next few 4-hour candles play out before making a decision.
If sellers do manage a close back below the upper boundary, we could see the CADJPY slide lower this week toward 82.20/30. Otherwise, additional gains are likely, though I won’t be interested if that’s the case.
On April 3 I mentioned the EURNZD as it was about to close below a key area near 1.6925. The 1.6905 close later that day paved the way for the pair to move lower toward the next key support near 1.6760.
Those interested in selling last week’s break never got a retest of former support at 1.6925. However, judging by Friday’s rally, we may get a retest of the confluence of resistance at 1.6930/50 before the next leg lower begins.
For a less liquid cross like the EURNZD, I’m going to require bearish price action from the 1.6930/50 area before considering a short entry. Key support for the week ahead comes in at 1.6760 followed by 1.6640.
[thrive_custom_box title=”” style=”dark” type=”color” color=”#fef5c4″ border=”fadf98″]
Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.
Click here to get access to the same style charts I use on this website.
[/thrive_custom_box]
