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EURUSD had looked promising from a bullish standpoint.
The breakout on January 7th signaled that falling wedge resistance from the April 2018 high would become support going forward.
It did for a while, but buyers couldn’t keep the pair afloat last week.
The close back below the wedge top just below 1.1400 signals that sellers have taken back control.
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It also exposes the 1.1300 support area with a close below that opening the door to the 2018 low at 1.1215.
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Of course, there’s always the chance that last week was a false (bearish) break. But it’s going to take a daily close back above 1.1390 to confirm it.
For now, I’d rather look elsewhere. The EURUSD has been incredibly choppy over the last few months and the price action in 2019 so far is par for the course.
GBPUSD bulls broke a key level last week.
On January 15th I mentioned how the technicals hinged on the Brexit vote.
At the time, GBPUSD was testing new support at 1.2760. After an intraday plunge below the area, the pair recovered in epic fashion.
The buying pressure continued over the next two days and even took out the January 14th high at 1.2931.
However, the selling pressure on Friday hints at a possible turn lower.
The short-term uptrend is still intact, but the 115 pip pullback on Friday is a worrying sign for bulls.
If I were a buyer here, I’d want to see GBPUSD hold above 1.2830. The area has been a key pivot of sorts since late last year.
As long as buyers can hold the pair above 1.2830, there’s a good chance we could see another run at 1.2980 resistance.
USDJPY reached key resistance on Friday.
I’ve mentioned the 109.80 area since the pair was carving a wedge pattern back in December of last year.
USDJPY hit our 108.00 target in record time. But since then, buyers have clawed back more than 400 pips.
Now, I’m not interested in selling USDJPY, at least not yet.
It’s going to take bearish price action such as a pin bar from the 109.80 area to confirm the setup.
Until that happens, we could see USDJPY continue higher.
A close above 109.80 would expose 111.70. Alternatively, bearish price action from 109.80 could send the risk-sensitive pair back to 107.70.
Similar to USDJPY, the AUDJPY reached a critical resistance area last week.
This was another pair I discussed several times last month. AUDJPY reached our first and second targets at 76.00 and 73.30 respectively.
But the “flush out” during the January 3rd flash crash triggered a bounce that has the pair retesting the level that broke down on December 21st.
Just like USDJPY though, I don’t see a selling opportunity just yet.
Friday’s session did carve a bearish rejection candle of sorts, but it isn’t enough for me to risk capital here.
Instead, I’ll wait to see what AUDJPY does early this week. I may entertain a short if we see a proper pin bar form or perhaps a bearish engulfing day.
On the flip side, a daily close above 78.70 would negate the bearish outlook in the short-term and expose 80.70.
The last time I discussed CADJPY was back on December 18th of last year.
We were trading a bearish break from an ascending channel that began in 2016. In fact, there were two channels in play at the time.
Within nine trading days, CADJPY fell an additional 650 pips following the retest of the 85.00 resistance area in mid-December.
The January 3rd flash crash delivered nearly half of those losses on its own.
Since that low on the 3rd, CADJPY has managed to claw back nearly 600 pips. Buyers are now approaching levels we discussed on the 18th of last month.
Two days ago, the pair managed to clear the 82.15 resistance level. This was the swing low in June of last year.
You can see how the pair held above 82.15 yesterday and even caught a bid from it earlier in today’s session.
That leaves the 83.80 resistance area exposed for next week.
This area served as support between August and December of last year. As such, it will likely attract sellers on a retest as new resistance.
However, sellers need to be careful here.
Many of the yen pairs are gaining ground as the S&P 500 is once again in rally mode.
It’s unclear at the moment whether this latest CADJPY rally is a respite in the downtrend or something more.
As such, waiting for bearish price action such as a pin bar from 83.80 wouldn’t be a bad idea.
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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