Get 40% Off
to Daily Price Action.
Ends March 31st!
EURUSD continued its sideways movement below the 1.1450 resistance area last week.
This has been the case since October 24, 2018.
However, the 1.1300 area has been there to support the euro since late November of last year.
In fact, the pair has carved higher lows since the 2018 low at 1.1215.
I still think it’s going to take a close above wedge resistance that extends from the April 2018 high. I mentioned this falling wedge back on December 24th.
You may be wondering about the false break on the 31st of December.
According to some charts, EURUSD closed the session at 1.1466. Given that our key level was at 1.1450, that should have confirmed the bullish break.
Get daily Forex setups and lessons from me on WhatsApp.
Text "Join" to +1-240-778-3679 (save this number in your phone's contact list)
But I’m not treating the close on the 31st as a false break.
Volume was so incredibly thin, especially in the final hours of trade, that the 1.1466 print cannot and should not be trusted in my opinion.
A few brokers even show a sub 1.1450 close on the 31st.
So, we’re still waiting for that daily close above wedge resistance to set the euro free. Until that happens, EURUSD will remain vulnerable.
Key support for the week ahead comes in at 1.1300 with a close above the 1.1450 area exposing 1.1530 followed by 1.1620.
GBPUSD extended its gains on Friday following a Thursday bullish pin bar.
It was largely a result of the flash crash that rocked the yen pairs. But Thursday’s session did reach a critical support level.
I pointed out this descending channel to members several weeks ago.
Sure enough, GBPUSD bounced from support on Thursday and even cleared the 1.2700 handle on Friday.
Remember that I use New York close charts so that each 24-hour session closes at 5 pm EST.
Go here to get instant access to the same charts I use.
But I’m not interested in trading the pound, at least not yet.
I have my doubts about the 1.2700 level. Just look at what happened recently between December 31st and January 1st.
Granted the volume was so low on those two days that the “false” break above 1.2700 may not mean a whole lot.
We’ll need to wait and see how GBPUSD reacts to 1.2700 this week.
If the pair displays bullish price action here, the area may hold as support this time around.
If it doesn’t, it would indicate the pair has lost interest in the 1.2700 handle.
Keep in mind that the Brexit saga will remain front and center this week. That means expect spurts of volatility from unscheduled comments.
Key resistance for the week ahead comes in at 1.2880 followed by 1.3070.
USDJPY hit my target at 108.00 in a hurry last week.
On December 17th, I published a commentary that explained why I felt a break lower was likely.
At the time, the pair was trading at 113.00. In fact, it was still well within the wedge pattern that had developed earlier in 2018.
However, the clues did point to a break lower, not higher.
USDJPY cleared wedge support on December 18th and retested the level as new resistance on the 19th.
Based on the height of the pattern, I felt a move to 108.00 was likely.
It seemed far-fetched at the time, but last week’s flash crash took out the 108.00 handle and even extended to 105.60 during the same session.
It was an intraday loss of more than 300 pips.
Events like the one on Thursday tend to “flush” the market. Orders that weren’t supposed to trigger for days or weeks get hit in minutes or even seconds.
That leaves a pair like USDJPY scrambling to find its footing.
So far, it seems sellers have reached a short-term exhaustion point. Following Friday’s rally, USDJPY is nearly back to pre-flash crash levels.
But this is not a buying opportunity, at least not for me.
I think any bounce here is temporary. And if USDJPY moves back into that 109.80 resistance area, I will be on the lookout for bearish price action.
Key support for the week ahead comes in at 107.60 followed by 105.60.
NZDUSD buyers were determined to close the pair above 0.6700 last week.
As a result, the pair has carved a bullish pin bar on the weekly time frame. That could trigger a move higher this week.
Not only has 0.6700 been a key factor for NZDUSD since July of last year, but it’s also the 50% retracement of the recent move higher that began in October 2018.
It’s no surprise then that buyers were eager to hold the line at 0.6700.
This week’s pin bar is also a bullish engulfing range. It’s largely a result of the small holiday range, but it is another bullish factor nonetheless.
As for key resistance levels, first up is 0.6920.
The area could be as high as 0.6970. However, the weekly time frame does show how the 0.6920 level has been influential since May of last year.
Even though 0.6920/70 may cause some issues for buyers, I don’t expect it to be the final destination for NZDUSD.
For that, I think we have to look higher toward 0.7170. The area served as key support in February and March of last year.
It would also equal a 580 pip move from this week’s low which is nearly identical to the recent 550 pip rally between October and December 2018.
That leaves traders with more than 400 pips to work with.
Alternatively, a weekly close below 0.6700 or a move below last week’s low of 0.6588 would negate the bullish outlook.
EURGBP has been in rally mode since mid-2015.
After reaching a multi-year low at 0.6930, the euro cross quickly bounced back, putting in a multi-year high in October 2016.
However, you wouldn’t know the EURGBP is in an uptrend looking at the price action since July of 2016.
For the last two and a half years, the euro cross has been range bound between 0.8300 support and 0.9300 resistance.
But we have a new structure in play since the November 2018 low.
It seems EURGBP has carved a wedge pattern that is best viewed on the weekly time frame.
You can see how the pair has struggled for the last few weeks around 0.9030. There was even a bearish pin bar three weeks ago.
Go here to get instant access to the same “New York close” charts I use to trade price action.
Since that time though, buyers have been relatively stubborn.
Given the uptrend that began in July 2015, a break higher seems to be the most likely outcome.
But that does not rule out another test of wedge support before the break.
There are a few possible targets if we do see a weekly close above wedge resistance.
The first is 0.9300. As I mentioned above, it’s the range ceiling that has been in place since August 2017.
The 0.9300 handle is followed by 0.9500 and then 0.9800. Both levels were key factors in 2008 and early 2009.
As you may know, there is also a measured objective here.
When trading a wedge like this, you can use the height of the pattern to identify a final target/objective.
That’s easy to measure since we know the bottom is 0.8300 and the top is 0.9300 which gives us a height of 1,000 pips.
If we then measure 1,000 pips above wedge resistance, we get parity or 1.0000.
I can assure you that there will be plenty of sellers around parity if EURGBP reaches it over the coming months.
Of course, there are no guarantees.
The pair may also break lower which would expose range support at 0.8300.
But all in all, this appears to be a bullish formation. And the fact that parity is the 1,000 pip objective could be a significant clue.
It’s a waiting game for now though. Buyers first need to secure a weekly close above wedge resistance near 0.9030 to confirm the breakout.
Until then, EURGBP is vulnerable but only as far as the 0.8730 support area.
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.
Please log in again. The login page will open in a new tab. After logging in you can close it and return to this page.