The EURUSD continued to chop higher last week, gaining 100 pips from the gap down on Monday.
While I do still think the 1.0650 handle is significant, another level that has caught my attention is last week’s high at 1.0715. This area was the January 2016 low and later served as a pivot in November and December of the same year.
The way the pair has chopped higher since December doesn’t offer much confidence if you’re a bull. For this reason, alone, I’m still under the impression that this is nothing more than a relief rally amidst a broader bearish trend.
A daily close above 1.0715 would expose the next key resistance at 1.0850. Alternatively, bearish price action from 1.0715 in the week ahead could offer a favorable opportunity to get short.
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I’ve modified my levels for the GBPUSD in light of last week’s price action. The 1.2330 area had looked promising, but because the pair hasn’t respected it in recent weeks, I’m turning my attention toward the 1.2415 area.
This level has been influential on a daily closing basis going back to November of last year. It has also capped two separate advances just this month.
But despite the level holding up as resistance so far in 2017, the GBPUSD looks relatively bullish right now. The impressive 370 pip rally last Tuesday combined with Friday’s bullish close suggest the 1.2415 handle may fall in the coming sessions.
A move lower this week would likely find support near the 1.2200 region. This area acted as support in late 2016/early 2017 before capping three advances between the 11th and 13th of this month.
The AUDUSD is showing signs of fatigue. The rally that began at the end of December has gained 430 pips and looks in desperate need of a pullback.
The 4-hour chart reveals a rising wedge, a pattern that suggests buyers are having trouble finding value at current levels. Immediate support and resistance come in at 0.7500 and 0.7585 respectively.
For the downside scenario to have a chance, a daily close below the 0.7500 handle is needed. This is a level that has been a factor since March of last year and more recently served as support between Wednesday and Thursday of last week.
I’ll stand aside, for now, to see what becomes of this 4-hour rising wedge. The volatile and sporadic conditions of late urge me to stay particularly cautious. That goes for every pair, not just the AUDUSD.
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I always like to have at least one long-term play on my watch list. In most cases, it ends up being a head and shoulders pattern or its inverse.
The EURGBP is one such pair that I’m keeping a close eye on. While the structure is far from complete, the last six months of price action has carved out what appears to be a head and shoulders reversal.
But for it to become confirmed and thus tradable, we’ll need to see a daily close below the neckline at 0.8330. Until that happens, I’ll stay on the sideline.
I’m in no hurry to trade this given the 800+ pip measured objective, which would give us a target near the May 2016 lows at 0.7560.
The GBPJPY mounted an impressive recovery last week. After gapping down 250 pips, the yen cross went on to gain 470 pips by Friday’s close.
However, the more significant test for buyers lies just 75 pips above current levels at 142.50. This area has served as a key pivot for the pair since July of last year.
It’s also the 50% Fibonacci retracement when measuring from the December 2016 high at 148.44 to the current 2017 low at 136.44.
If we get a daily close above 142.50, there’s a good chance the GBPJPY will move back toward those December highs near 148.00. Alternatively, a move lower would likely encounter support near the 138.80 handle.
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