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Is this the time EURUSD buyers force a reversal, or will this turn out to be another false start?
That’s likely the question on everyone’s mind as we start a new week.
Nobody knows where EURUSD is going, or any market for that matter.
But one thing we do know is that the double/triple bottom at 1.1110 is holding for now. I wrote about this formation on May 23rd.
Even though buyers gave up significant ground in late May, they never allowed the price to breach the 1.1110 level.
And as I wrote on May 23rd, EURUSD needed a daily close above 1.1260 to confirm the reversal and expose the objective at 1.1410.
That’s exactly what happened last week.
Thursday’s 1.1275 close confirmed the double/triple bottom reversal. You can even see where Friday’s session retested and held 1.1260 as new support.
Although I have 1.1260 marked as support, I would like to see euro bulls defend the 1.1300 region as new support this week.
You’ll notice that 1.1306 is the location of the Wednesday and Thursday highs from last week.
There are also several lows from late 2018 and early 2019 in this 1.1300 area.
I do expect to see some consolidation early this week given the 150 pip two-day rally at the end of last week.
But as long as 1.1260 (ideally 1.1300) are intact as support, the 1.1410 resistance area is exposed.
The GBPUSD may be gearing for a push higher this week.
It wouldn’t be a surprise, either.
That selloff that commenced in early May was incredibly aggressive.
In fact, GBPUSD lost ground for 13 days in a row last month, which is impressive in and of itself.
But the break below descending channel support was designed to fail.
It’s why I wrote the following in the May 26th commentary:
I don’t like the idea of selling GBPUSD here.
I often discuss the idea that downward breaks of descending levels are considered “weak” breakouts.
In other words, they aren’t convincing.
The same goes for an upward break of an ascending level or pattern.
With that in mind, I wouldn’t be surprised to see GBPUSD break back above that 1.2740 area this week.
But it’s going to take a daily close back above it to turn the tide in favor of buyers.
And it’s a good thing we avoided selling GBPUSD, too.
That low on May 23rd was just 45 pips above the May low which eventually triggered a 200-pip bounce.
With GBPUSD back inside this channel, that 1.2700 handle becomes support.
Buyers don’t have a ton of room here, though. The 1.2800 resistance level may come into play this week.
All that said, I’m still not a fan of trading GBPUSD. The same goes for EURUSD.
I think many of the currency crosses are producing much cleaner price action and respecting key levels better than some of the majors.
EURNZD played out perfectly for us last week.
I wrote about the false break above 1.7120 earlier this month. I also pointed out the ascending channel on May 31st.
The bearish pin bar inside bar combination in that May 31st commentary triggered a 180-pip drop for EURNZD.
One support level I mentioned was 1.6930.
Sure enough, EURNZD bounced from here last week; quite aggressively, in fact.
But as long as 1.7030 holds as resistance, I favor EURNZD lower this week.
That said, I would give this one some space unless you’re already short from higher up.
Thursday’s rally was relatively aggressive and illustrates the amount of demand below this 1.7030 region.
I’m thinking we either get a bearish signal at 1.7030, an intraday pop back to 1.7120 or a daily close below 1.6930 support.
Regardless of which scenario plays out, I’m only interested in EURNZD shorts for now.
I’ve written about GBPCAD several times since May 22nd.
That commentary was the first look at the ascending channel that has developed since the September 2017 low.
I then covered the pair on May 30th and again on June 4th.
The latter is when I wrote that a breakdown was imminent. I came to this conclusion based on the heavy price action above key support.
Sure enough, GBPCAD broke channel support on the 4th.
Another area I mentioned to members was the 1.6980 horizontal level.
I even told Daily Price Action members that I would entertain a short at 1.6980 following a retest of the area as new resistance.
I got my entry on Friday and GBPCAD closed near session lows.
I like GBPCAD lower as long as this 1.6980 region is intact as new resistance.
As for key support, the triple bottom and 2018 low at 1.6600 is sure to attract buyers, so that’s my initial target here.
Another Canadian dollar cross that has set up nicely for us is NZDCAD.
I haven’t written about this pair for quite some time, but I like the look of both the weekly and intraday time frames here.
The weekly time frame, of course, shows a bearish pin bar, as shown below.
It materialized after last week’s failed attempt to push past the 0.8870 resistance area, which actually extends as high as 0.8900.
And as for the intraday time frames, NZDCAD has carved an ascending channel that also hints at a push lower this week.
If we treat that channel as a bearish flag pattern, the measured objective has quite a lot going for it.
It’s one of the better long-term setups I’ve seen this year.
We’ve been discussing NZDCAD and its potential objective all morning in the member’s area and will continue to do so throughout the week.
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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