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EURUSD has been a difficult pair to read so far in 2019.
In fact, the single currency hasn’t done much since late October of last year.
But the final 48 hours of last week did bounce from a significant support area I’ve had on my chart since last November.
The 1.1300 support area has attracted buyers since EURUSD first bounced from here in August of 2018.
And the same thing happened last week.
After testing 1.1300 on Thursday, the euro bounced 100 pips before the weekend.
We’ll see just how important Friday’s rally was this week. It will either attract buyers above 1.1380 or prove to be mere profit-taking before the weekend.
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If EURUSD can stay above the 1.1380 support area, we could see the pair move toward the next key resistance area at 1.1450/80.
Alternatively, a close below 1.1380 could spoil the bullish narrative.
I’ve been relatively bullish GBPUSD since mid-December.
I wrote about the descending channel here several times over the last six weeks. There was also a large falling wedge pattern that I wrote about on January 11th.
Buyers cleared wedge resistance on January 11th. The pair then retested this area as new support during the Brexit vote on the 15th.
And GBPUSD buyers cleared yet another level on Friday.
I mentioned on Wednesday how the 1.3080 could serve as resistance. It’s the top of the descending channel that extends from the June 2018 high.
As we know, old resistance becomes new support.
That means any retest of the 1.3100 area will likely attract an influx of buying pressure.
Of course, there’s no guarantee GBPUSD will move that low this week.
Given the buying pressure on Friday, I wouldn’t be surprised to see a much more shallow pullback before the next leg higher.
But as long as 1.3100 support is intact, I have every reason to believe GBPUSD will extend recent gains to the 1.3440 resistance area.
Immediate resistance for the week ahead comes in at 1.3260.
Following an incredibly aggressive selloff in December, USDJPY has recovered back to key resistance at 109.80.
It’s an area I’ve mentioned several times over the last few weeks.
USDJPY has also nearly made its way back to the 50% retracement of the range from the 2018 high to the year-to-date low.
As long as the pair remains below 109.80 on a daily closing basis, USDJPY is vulnerable.
Remember that the “daily close” refers to the New York 5 pm EST close.
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If we do see the pair start to move lower this week, one target could be the 107.70 area.
Alternatively, a daily close above 109.80 would set our sights higher toward the 111.70 region.
I will be keeping a close eye on USDJPY this week with an interest on how things unfold below 109.80 resistance.
I first wrote about a bearish view of USDCAD on January 3rd.
The pair was coming off ascending channel resistance that extends from the June 2018 high.
With the pair now 340 pips lower, USDCAD bears have taken out a level that could extend losses by another 200 pips.
Since January 11th, the pair has carved a short-term ascending channel. From the look of things, it appears to be a bearish continuation pattern.
If we use the broader ascending channel support, we get a target of 1.3000 or perhaps just below it.
As long as the pair remains below 1.3280 resistance, I will remain bearish.
However, there is no guarantee we’ll see a retest as high as 1.3280 this week. In fact, there’s a good reason to suspect a rejection from 1.3250.
Either way, USDCAD looks set to extend recent losses another 200 pips toward the 1.3000 support handle.
EURGBP broke below a key support level last week.
On January 4th, I mentioned a wedge pattern that could produce a 400 pip move for the euro cross.
We viewed the pattern on the weekly time frame. However, Thursday’s close below wedge support could be the first sign of an extended move lower.
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That said, there are two things I wanted to see here first.
One was a weekly close below wedge support. Right now that level comes in at 0.8700.
The second is a retest of former support as new resistance. Again, that’s where the 0.8700 area comes into play.
My reason for these requirements is simple.
The EURGBP is a cross that’s known for being sporadic at times, and so far January has been a challenging month for reading price action.
So far, the pair has completed the first of two requirements.
The weekly close below support is behind us, so now it’s a matter of waiting for a retest of the 0.8700 area as new resistance.
And if sellers can get through the 2018 low at 0.8620, we could see EURGBP slide toward the 2017 low at 0.8300. That’s the inception point of this wedge.
Alternatively, a close back above former wedge support near 0.8700 would negate the 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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