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EURUSD bulls lost ground every day last week.
However, if the last four months are any indication, this may only be a temporary selloff.
EURUSD has been mostly range-bound since October of last year. The majority of that time was spent between 1.1300 support and 1.1500 resistance.
But there are no guarantees that the 1.1300 support area will hold. Look no further than the November 12th selloff.
Keep in mind that EURUSD has also been trending lower since this time last year, so the momentum still favors sellers.
I won’t do anything here until I see a break from the current range.
That said, bullish price action this week from 1.1300 could present an opportunity to take advantage of this 200 pip range.
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The GBPUSD rally that began January 3rd may have come to an end.
After breaking above resistance on January 25th, the pair retested the area as new support between January 29th and February 1st.
However, buyers failed to hold the pair above the level on the 4th.
I use New York close (5 pm EST) charts to confirm breakouts. These charts are required for trading price action.
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That led to a drop of 180 pips last week followed by a retest of 1.2885 support.
We could see a further bounce this week, but the 1.3030 resistance area may limit gains.
It’s going to take a daily close below 1.2885 to expose the next key support at 1.2700.
USDJPY continues to consolidate following the January 3rd flash crash.
We had a great run in December and USDJPY was one of our best trades. The wedge that broke down in mid-December played out perfectly.
Moves like the one in early January tend to act as a natural pause button for the market. Things can slow down for weeks or even months.
In my opinion, the January 3rd flash crash is the primary reason the market has been relatively slow so far in 2019.
There’s no telling how much longer it might last. However, technical patterns like the one below could offer clues.
What’s interesting about USDJPY is the less steep resistance level you see below.
The pair is not carving an equidistant channel. Instead, it appears to be forming a rising wedge pattern of sorts.
Either way, a close below support could open up downside targets. Those include 107.60 followed by the year-to-date low of 105.60.
Important: New York close charts are required for trading price action.
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Bear in mind too that this pattern could be in its early stages. It may take another few weeks before we see something favorable materialize.
I may also need to adjust the levels you see below depending on how USDJPY reacts to both support and resistance over the coming sessions.
But for now, the pattern looks promising especially given how sleepy the markets have been so far this year.
It’s going to take a daily close below support near 109.00 to expose 107.60. A daily close below that would open the door to 105.60.
On the flip side, a retest of 110.30/40 resistance this week would attract sellers.
EURJPY is another yen pair that has been consolidating since the January flash crash.
However, Friday’s close may have opened up downside targets.
If the former wedge support level below is significant, we could see sellers defend it this week.
The pair is also back below the 124.90 horizontal level. I’ve mentioned this area several times in recent weeks.
On top of that, EURJPY carved a bearish engulfing pattern last week (weekly time frame). That alone could be enough to push EURJPY lower this week.
As for targets, keep an eye on 122.60. It’s the close of the January 3rd flash crash and, of course, the January 4th open.
A close below that could extend EURJPY as low as the 119.00 area.
I mentioned CADJPY a couple of times last week.
The first commentary on the 4th focused on the confluence of resistance near 83.80.
Two days later, CADJPY was down 100 pips and testing channel support at 82.70.
I pointed out this support area again on Thursday. The idea was to watch for a daily close below it followed by a retest of the area as new resistance.
It looked as though CADJPY bulls would close the pair back inside this channel before the weekend.
However, a late Friday push from sellers kept the area intact as new resistance.
That means the idea for this week is unchanged. As long as the pair remains below 82.70/90 on a daily closing basis, sellers are in control.
Key support comes in at 80.55 followed by 78.70.
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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