The EURUSD has moved along a virtually vertical trajectory since breaking the triple top at around the 1.4870-1.4900 area. Anyone trying to pick a top on the buoyant pair has been painfully disappointed. That said, no rally is indefinite and a retracement will occur.
Today’s daily chart is shaping to form an Inverted Hammer after the pair’s attempted run above 1.5800 lost steam. A long rally can be expected to have an equally profound reversal. If the top below 1.5800 is confirmed with a bearish candle tomorrow, a short trade can yield over 500 pips in profit. On balance, the long-term outlook for EURUSD is definitively bullish, so a tight stop should be employed since we are trading counter-trend.
[B]EUR/USD[/B]
[B]Resistance Reached?[/B]
The EURUSD has moved along a virtually vertical trajectory since breaking the triple top at around the 1.4870-1.4900 area. Anyone trying to pick a top on the buoyant pair has been painfully disappointed. That said, no rally is indefinite and a retracement will occur.
Today’s daily chart is shaping to form an Inverted Hammer after the pair’s attempted run above 1.5800 lost steam. A long rally can be expected to have an equally profound reversal. If the top below 1.5800 is confirmed with a bearish candle tomorrow, a short trade can yield over 500 pips in profit. On balance, the long-term outlook for EURUSD is definitively bullish, so a tight stop should be employed since we are trading counter-trend.
[B]EUR/USD Trading Strategy[/B]
- If the Inverted Hammer formation is confirmed with a red candle, short EURUSD below 1.5860.
- Set stop above the Hammer wick’s high at 15924.
- Set profit target above 1.5320, giving an excellent risk-reward ratio (risking 64 pips to gain 540).
[B]GBP/USD[/B]
[B]Found support?[/B]
Having broken a significant resistance level at 1.9960, the GBPUSD mounted a bullish run back above the 2.00 level. The pair then ran into resistance at 2.0331, falling for three consecutive days to form the Three Black Crows formation.
The current pull-back now finds itself testing the upward sloping trend-line at 2.0040, with resistance-turned-support at 1.9960 firmly in place below that. Our immediate posture is to remain flat as the pair settles towards support with a medium-term bullish view from there.
[B]GBP/USD Strategy[/B]
- Long GBPUSD above 2.0040 following a confirmation with a bullish candle at support.
- Rather than setting a limit order to take profit at a hard target, we will wait to see what happens when the pair tests resistance at 2.0331 and hold the trade open in the event of a breach.
- Set stop-loss just below 1.9900 to limit risk should support at 1.9963 give in. This gives good risk-reward parameters, risking 150 or so pips to potentially gain 290.
[B]USD/JPY[/B]
[B]Freefall![/B]
USDJPY broke below medium term support above 103.00 and the long-term support at 101.69. USDJPY has not breached this level since 1994. Previous tests occurred in 1999 and 2004.
The pair is now in a virtual freefall eyeing the all time low around 80. However, as we mentioned for the EURUSD above, no rally is indefinite and a retracement of current yen strength will occur. The current price action does not signal a retracement to be imminent, but a sell at current levels with the pair a bit over-extended to the downside seems aggressive.
Though the bias is decidedly to the downside, we will wait for a better entry point to present itself.
[B]USD/JPY Strategy[/B]
We remain neutral on the USD/JPY at the moment. The pair’s current positioning does not yield a good entry point.
[B]USD/CAD[/B]
[B]Coiling up[/B]
Having regained some territory after the dramatic spike low to 0.9000, the USDCAD now looks poised to dive back down again. The pair is trading in a Flag continuation pattern, suggesting the bias remains to the downside. The candles for the past several weeks click close to support, suggesting a break is brewing.
While there is no confirmation at the moment, the bias seems to the downside. If this scenario materializes, we will be looking to short USDCAD on a weekly close below 0.9770, targeting the low at 0.9430.
[B]USD/CAD Strategy[/B]
We remain flat as we wait for confirmation to enter short.
[B]
AUD/USD[/B]
[B]Ready for another run?[/B]
The past two weeks have seen the AUDUSD test at all-time high at 0.9490, only to fall back sharply some 400 pips. The decline has now stalled a bit at the upward-sloping medium term support.
With a yield gap of 4.25%, our long term bias for the AUDUSD is bullish. Should the pair fail to close below the trend line at 0.9230, we will look for a bullish candle to signal a long entry. If that support gives way, the next hurdle is a multiple resistance-turned-support level at 0.9104.
We will wait for the current candle to close and monitor the next one to confirm a bottom is in place, then go long once an entry point presents itself. Our initial profit target will be the high at 0.9500. If the decline stops at the trend-line and the AUD rally resumes, our stop-loss will be below 0.9210. If the pair breaks past the trend line, we will look for an entry above 0.9104 with a stop-loss near 0.9010.
[B]AUD/USD Strategy[/B]
Our bias is bullish, but we remain on the sidelines for the moment as an entry point presents itself.
[B]NZD/USD [/B]
[B]Walking the line[/B]
Having tested the high of 0.8200 again last week, the NZDUSD has taken a step back towards the trend-line support at 0.7940. This now closely coincides with multiple resistance-turned-support level near 0.7934 (see chart below).
With the long term trend still looking bullish, this retracement presents a buying opportunity above support aiming for a bounce to test 0.8200 once again.
On balance, the monthly chart suggests a long-term resistance level in place since 2003 coinciding with the 0.8200 level. The March candle currently looks to be flirting with a Doji or Spinning Top body, suggesting the possibility of a prolonged reversal. However, we must be cautious not to make assumptions before the candle closes and confirmation is in place. For the time being, our bias remains long NZDUSD.
[B]NZD/USD Strategy[/B]
- Buy NZDUSD above 0.7934 targeting the February high of 0.8200.
- Place stop loss below the trend line near 0.7850, thereby risking about 70 pips to gain over 260.
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