Last week our analysis yielded a net 336 pips. Our long-term Canadian dollar range trade descended lower for 200 pips in profit, while our Yen position hit the profit target for 289 pips. Our stop-loss on the Pound was hit for a loss of 153 pips, detracting minimally from our overall performance and still making for a very fruitful week. Looking at the week ahead, EURUSD and NZDUSD both offer attractive entry points, with USDCAD still poised for more gains.
[B]EUR/USD[/B]
[B]Triple Top Broken, Looking Up From Trend Line[/B]
Last week, the danger of a trend break emerged as we saw what could have been a Bearish Engulfing as the US Dollar strengthened following statements at that weekend’s G7 summit. We opted to remain on the sidelines and wait for the market to tell us how best to proceed.
The bearish reversal did not materialize. Rather, EURUSD broke through triple top resistance at 1.5900 with a Long White Candle. A lull in US and European data at last week’s end prompted what looked to be a technically driven relief retracement. This saw the pair decline to trend line support. From here, we continue to believe that EURUSD will test 1.6000. Current positioning at the trend line offers a good entry point.
[B]
EUR/USD Trading Strategy[/B]
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Long EURUSD at trend line support above 1.5800
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Set stop-loss below last week’s low at 1.5701
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Set target at 1.6000
For more resources on the EURUSD, please visit the DailyFX Euro Currency Room.
[B]GBP/USD
[/B]
[B]Pound Bulls Retake Initiative[/B]
Last week, we were waiting for a break of support at 1.9690 to enter a short position. We saw our entry conditions met 2 days into the trading week and entered the market. In the following days, GBPUSD surged unexpectedly higher to break trend line resistance with a Large White Candle. Our stop-loss at 1.9843 was triggered for a loss of 153 pips.
The pound is currently trading near an established pivot level 1.9970. This has acted as support or resistance at various points in recent price action. The pair’s behavior at this juncture will be important for determining directional bias going forward. Without a clear signal, we will remain on the sidelines in GBPUSD.
[B]GBP/USD Strategy[/B]
We remain flat as we look for a confirmation of directional bias.
For more resources on the GBPUSD, please visit the DailyFX British Pound Currency Room.
[B]USD/JPY[/B]
[B]Topside Break Out[/B]
Last week we saw a Hammer candle forming but chose to hold off and wait for confirmation until it closed. We noted that if the candle closes with the Hammer still showing, this will be a bullish reversal signal pointing to USDJPY upside momentum. We therefore suggested a conditional strategy, saying that if confirmation comes we will go long USDJPY above 100.70, revising our profit target lower to aim just below 104.00. Our analysis proved correct. The candle we were looking at was confirmed a Hammer (see below). This prompted us to buy USDJPY, entering at 101.08 with a stop at 99.97 and targeting 103.97. Our target price was reached, yielding 289 pips in profit.
Upside momentum has extended above the medium term resistance level at 102.90 (shown below). This suggests USDJPY will continue moving up from here. However, present positioning does not yield good risk-reward parameters. Should the pair retrace back to 102.90, we will enter long upon seeing a bullish reversal candlestick.
[B]USD/JPY Strategy[/B]
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Long USDJPY if it retraces to 102.90 and a confirms a reversal.
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Set stop-loss near 101.40 amid recent price congestion.
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Set profit target just below 106.00, risking 150 pips to gain about 300.
For more resources on the USDJPY, please visit the DailyFX Japanese Yen Currency Room.
[B]USD/CAD[/B]
[B]Range Top Caps Upside, Trend Line Support Gives Way[/B]
Last week began with USDCAD back near the large range top at 1.0250. Though we saw no candlestick signals, our bias remained short given the pair’s previous behavior at this level. We opted to wait for confirmation of a close below resistance on today’s candle to go short again towards the bottom of the range.
Our confirmation came, and we shorted USDCAD following the next day’s bearish close. As we noted, we monitored closely as the pair tested the trend line at 1.0100. USDCAD did not stall here, breaking though with a Long Black Candle and prompting us to remain short. While there was a relief rally back to the tend line following the break, this support-turned-resistance was not penetrated and remains in effect. We will move our stop to break even (in our case we got in at 1.0185) and continue to hold short towards our target at 0.9835.
[B]
USD/CAD Strategy[/B]
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Continue holding short USDCAD.
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Move stop to break even (1.0185 is our case).
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Target 0.9835 near the range bottom.
For more resources on the USDCAD, please visit the DailyFX Canadian Dollar Currency Room.
[B]AUD/USD[/B]
[B]Reversing Lower From Triple Top Resistance[/B]
Last week we were looking at AUDUSD price action at 0.9200, suggesting this would be a level of psychological support. This assertion proved correct, as the pair showed a Hammer and bounced up from this point towards 0.9400.
We have now identified a downward-sloping resistance line connecting recent highs for a triple top. This looks to be a significant hurdle to further upside at the moment. We see AUDUSD retracing lower near 0.9200 again. That said, we will opt to take a short position. AUDUSD has been trading along an established bullish trend since August of last year. The yield differential is also resoundingly in favor of the Australian dollar. With those considerations in mind, we would rather wait for a long entry to present itself rather than trade counter-trend.
[B]
AUD/USD Strategy[/B]
We remain flat as we wait for an entry point to present itself.
For more resources on the AUDUSD, please visit the DailyFX Australian Dollar Currency Room.
[B]NZD/USD[/B]
[B]Trend Line Holds, Eyeing Upside[/B]
Last week, NZDUSD found itself at the familiar upward-sloping trend line established in August of last year. We noted that if downside is contained here, we expect New Zealand Dollar bulls to retake momentum and drive the pair upward to the March high at 0.8067.
Last week saw price action remain above trend line support, with a double Hammer pattern suggesting a reversal upward. With little changed in the pair’s net positioning, we will hold to the same target and stop loss levels employed last week.
[B]NZD/USD Strategy
[/B]
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Long NZDUSD above 0.7850 at the upward sloping trend line.
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Set stop loss at 0.7773, just under the wick low of the most recent trend line test.
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Set target at 0.8067 near the March top, risking 77 pips to gain 217.
For more resources on the NZDUSD, please visit the DailyFX New Zealand Dollar Currency Room.
[B]NOTE:[/B] Unless otherwise specified, all trades are closed at the end of the trading week.
[I]To contact Ilya regarding this or other articles he has authored, please email him at <[email protected]>[/I]