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The EURUSD put in what appears to be another false break last week.
This has been a common theme throughout 2019. It’s why I have avoided buying the pair for the majority of the year.
Friday’s close back below 1.1260 suggests we could see another run at the 1.1110 support level.
However, unlike the last few retests of this area, I’m not convinced we’ll see another bounce.
A false break like this often triggers an extended move in the opposite direction.
In the case of EURUSD, that means a move lower.
And if the 1.1110 support area fails on a daily closing basis, I have every reason to believe the single currency will trend lower toward the 1.0860 region.
The weekly time frame illustrates why it’s a significant area.
But as long as 1.1110 support and 1.1260 resistance are intact, it’s best to play the ranges here on EURUSD.
Much like EURUSD, the GBPUSD bullish move failed on Friday.
Although this channel is starting to lose its significance, I still think it’s serving as a guide for buyers and sellers.
You can see how the GBPUSD rally was stuffed between May 21st and June 6th.
As soon as the pair climbed above it on the 7th, the level began serving as support and did so until last Friday’s breakdown.
For the week ahead, I think we could see a few buyers surface in the 1.2580 area.
At the other end, any pops into 1.2650 resistance are likely to be sold quite aggressively.
I wrote about EURGBP on June 6th. At the time, the pair was coming off of 0.8840 support, and all eyes were on 0.8930 resistance.
You can see where the pair encountered selling pressure at 0.8930 last week.
If buyers can take out 0.8930 resistance this week, we could see EURGBP trend higher toward the year-to-date high near 0.9060.
Alternatively, a daily close below 0.8840 would signal a larger pullback. This is a must-hold area for buyers, in my opinion.
I’m not interested in EURGBP at the moment, but the current range could produce a breakout opportunity over the coming sessions.
I wrote about GBPCAD on June 4th and again on the 7th.
The idea both times was simple. The pair had carved a massive ascending channel and was resting just above its key support level.
However, the lower high in May combined with the heavy price action above 170.00 meant I was not interested in buying.
Even the title of the June 4th commentary included the words, “breakdown imminent”.
On that same day (June 4th), GBPCAD closed below channel support.
And by the 5th, the pair was below the 1.6980 horizontal level. This is the area I told members I wanted to short from, and I did.
The next two sessions saw GBPCAD lose more than 200 pips from high to low.
But since the June 10th low, buyers have managed to claw back 170 pips as of last week’s high.
So where does that leave us for this week?
I like to keep things simple. In the case of GBPCAD, as long as the pair remains below 1.6980 on a daily closing basis, I will stay short.
Even if buyers take back 1.6980, my bearish bias for GBPCAD will be in play as long as the pair is below former channel support near 1.7050.
Key support is the same at 1.6600. That’s the 2018 low as well as the triple bottom that triggered the bounce late last year.
Now, if I see the pair challenge this week’s high at 1.6962 this week, I will exit my position. I’m not willing to take a loss here, and I can always get back in higher if warranted.
The NZDCAD reached our first target at 0.8690 last week.
This was my top trade idea last Sunday as the pair had just carved a bearish pin bar on the weekly time frame.
NZDCAD had also formed an ascending channel that I was treating (and still am) as a bearish flag pattern.
In my opinion, the NZDCAD has more downside in store.
However, I do expect bounces while above 0.8690 on a daily closing basis. A close below that would expose the 0.8500 area.
Key resistance for the week ahead comes in at 0.8780.
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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