I will look to trading EURNZD southward this week. Here’s why.
On the weekly time frame, price action is respecting a support trendline (chocolate colour) from the low of February 2017. This trendline formed an ascending channel with the highs of recent candlesticks. Last week, a pinbar-like bullish candlestick was formed and tested the channel support. Should bulls follow through on this pinbar, the horizontal resistance around the 1.69350 area is likely to be an initial target and it is within reach. This area is proximal to the monthly central pivot. As price action is around the mean value area, such a bullish move is likely to be feasible and may gain momentum if bulls significantly clear the 1.69350 area.
On the daily time frame, price action has formed four corrective price waves in the ascending channel seen on the weekly time frame (bound in chocolate coloured lines). A fifth price wave was bearing southward from channel resistance but bulls were resisting the move. Recent price action is under the influence of bulls and they may take price action to the next horizontal resistance around the 1.69350 area. This is in confluence with the 38.2/50.0 Fib retracement zone of the swing down from the high of December 1, 2017. It is also proximal to the monthly central pivot. This is an area I will be watching for a sell trading opportunity should a setup be seen on a daily or H4 closing basis. A breach of that zone northward on a daily closing basis will see me step aside and wait for a buy setup with a view to targeting the channel resistance.
I have just concluded the weekly scan and analysis of the pairs on my watch list. One criterion I recently introduced in my analysis is a weekly technical analysis or rating of the relative strengths of major currencies. For this week, the GBP is technically the strongest among the majors.
Here’s why I will be on the sidelines regarding EURUSD for now.The pair may be technically bullish at the moment. But there is need to be wary of the market mood and the location of price action. Basically, price action on the EURUSD is operating in a strong resistance zone and the intra-day chart (H4) shows price action constrained in a symmetrical triangle. It is important to wait for clarity of price action in the early part of this week.
One important area you can enhance your chance of trading success, and thus trap the market, is ‘precisely’ identifying turning zones. You then use a stop order to enter a trade in such a zone once you have a setup on your trading time frame. For example, if you use H4 time frame for trade setup, identify turning zones based on the market direction on the D1 or W1 time frame. The ability to properly identify and map such zones should be cultivated beyond using indicators for trading. With experience, the trader will be able to map high-quality turning zones.
Let us look at what is happening to GBPUSD right now. It is basically in a bearish mood but it is retracing northward atm to enter a turning zone on the D1 time frame imho. See the D1 chart attached for a turning zone bound in ‘deepblue’ horizontal lines. It is clearer on the attached H1 chart.
Price action entered the zone and was sideways for a long while. Doji-like candlesticks formed which set up for a northward trade but the setup was not convincing to me and I didn’t go long. I look for a stronger setup for swing trading.
Here’s why I am bearish in the short term on the GBPJPY.
On the daily time frame, price action has been operating in a wedge (bound by navy coloured lines) for a while. Most recent price action is located around the distal (or resistance) line of the wedge. Besides, a resistance trendline (navy) from the high of September 21, 2017 is in confluence with the wedge resistance line. A bearish pinbar printed last Friday around this confluence of resistance. There is a likelihood that bears will follow through with further southward move in the early part of this week. A likely target of bears is the channel support, which may extend to the 151.280 area, the immediate horizontal support. Technically, I do not see momentum for any bullish move until a southward retracement has taken place.
On the H4 time frame, it can be seen that technically the impulsive trend is northward and a simple wave count shows that recent price action is in a corrective phase. But the technical mood is southward with a possible initial target around the 151.280 area. Thus, the technicals support a bearish bias in the short term.
The pair has been ranging for quite a while. On the weekly time frame, price action has been operating in an ascending triangle (chocolate) since November 2016. Last week, a relatively big bearish candlestick broke the wedge support line and hit the immediate horizontal support around the 83.990 area. However, before the close of the weekly session, bulls managed to push price action up to the 85.010 area. It should be noted that price action since October 2017 has been ranging in the 38.2 – 61.8 Fib retracement zone of the swing down from the high of November 2014 to the low of June 2016. Much likely we may expect bears to take the price action further southward should they break below the 83.990 area, which is in confluence with the 38.2 Fib and a significant horizontal support. Looking left of the attached weekly chart, we can see that the impulsive wave is southward.
Technically, I favour scenario trading. You anticipate alternative market scenarios and wait for a feasible trade setup as the market meets one of the scenarios.
I hold a short-term bearish directional bias on the EURUSD. Here’s my top-down technical perspective.
On the weekly time frame, price action has been ranging around the 1.22290/1.25420 area for four weeks. As price action has found it difficult to break above the resistance zone, it is likely that we see an attempt by the market to bear southward and regroup for another onslaught on the zone. Last week, an inverted hammer-like candlestick was formed around the zone; which portends the likelihood of a bearish follow through of price action in the days ahead. An ascending trendline (chocolate) from the low of April 2017 is still very much in play and bears may target a retest of the trendline. Such a move southward is likely to expose the horizontal support around the 1.20500 area. However, should bears fail to break down the trendline, bulls are likely to seize the initiative to turn around price action northward.
On the H4 time frame, price action has been consolidating in an ascending channel (magenta) for quite a while. Recent price action is bearing southward from the channel resistance area. An initial target of bears is the channel support or the horizontal support around the 1.22630 area. However, a micro-support trendline (navy) formed by recent price action may be a barrier for a southward move. So, should bears fail to clear this barrier, we may see bulls turn price action northward toward the channel resistance…
One of the things I do on the weekend is to do a thorough screening of the pairs on my watch list and then analyze them for probable quality trading during the ensuing week. I have found this to be helpful for my trading style as a short-term swing trader. Currently I have 10 pairs and GOLD (in USD) on my watch list. Based on the screening I have just completed, I will be tracking USDJPY, EURJPY and GBPAUD for trading opportunities this week.
I am bearish on EURJPY. Here’s why, from a technical perspective.
On the daily time frame, price action has broken down an ascending channel (magenta) within which it has operated since September 2017. The technical structure on the daily time frame favours a bearish continuation. A likely target of bears is the 127.830 area, which is confluence with the lowest point of the channel support; this may extend to the 126.430 area.
On the H4 time frame, the angle of the descending trendline (navy) suggests a strong bearish mood. We may not see more than a feeble northward pullback until bears take price action further down. The technicals are synced in favour of bears.
The weekly candlestick formed three weeks’ ago on GOLD/USD is still acting as a control candlestick. If price action breaches the low of that candlestick, around the 1308.70 area, we may expect some southward momentum with possible target of the 1278.68 area. On the H4 time frame, a triangular pattern (red) has been broken down but not completely; a retest of the support trendline by price action may be in the offing.
A significant step in how I try to trap the markets is doing a top-down technical analysis of a few selected pairs. I have just concluded a screening of the 10 pairs on my watch list. Technically I have a strong interest in trading the USDJPY and EURJPY southward next week. However, this does not mean that I will not consider the prevailing market conditions or wait for the right moment to enter a trade. Part of trapping the market is waiting for the markets to meet your conditions or enter some predetermined boundaries or zones.
I am still bearish on USDJPY. Here’s why, from a technical perspective.
On the H4 time frame, price action has moved away from the mean and it is very close to a support trendline (purple) seen on the weekly time frame. Bulls were able to take price action a bit northward before the closing session last Friday. Thus, we may see a pullback of price action northward in the early part of this week. A resistance trendline (magenta) on the H4 time frame may be a target of a retest by bulls. Thereafter, we are likely to see a southward turnaround.
If you are tracking EURUSD for trading opportunities this week, be aware that the price action is largely operating in a descending channel (navy in attached W1 time frame.) Price action is at the channel resistance and in confluence with a horizontal resistance zone (bound by purple lines).Given the upper shadow formation of recent candlesticks in the area, we may likely see a southward turnaround this week. However, as the next resistance is just a few pips away northward, around the 1.29250 area (magenta), bulls may take price action a bit northward before a southward turnaround. The 1.20670/1.19580 area is likely to be a target of bears.
If you would trap the market, learn to analyse and track it Then watch how price action behaves around your predefined trading zones and enter when you have the signals/setups that meet your criteria/checklist.
If you are tracking USDCAD this week, you may want to consider this technical perspective.
On the H4 time frame, price action is bearing northward with strong momentum and respecting a support trendline (black). But it is nearing a resistance zone around the 1.31730 area and may reach this zone before a southward pullback to around the 1.30190 area. Thereafter, we may see further northward move. The technical structure is in favour of bulls. However, should bears manage to turn around price action and breach the trendline (black) southward, flipping it to resistance, we may see them target the minor horizontal support around the 1.28730 area before seeking a bigger target around 1.27630.
As the present location of price action is around the 61.8 Fib retracement zone of the downward swing from the high of May 2017 to the low of September 2017, I will stay on the sideline until there is a southward pullback of price action or a northward break of the horizontal resistance around 1.31720 on at least a four-hourly closing basis.
