The past week was marked by consolidation across most of the major currency pairs as the US Dollar traded sideways having broken above the 2008 high. Established support and resistance levels are being worn down as the bulls and bears haggle to establish the directional bias going forward, opening the door for likely breakouts in the bear term.
[B]EUR/USD
Strategy: Short at 1.5510 and 1.3364, Targeting below 1.2453
Weekly Profit / Loss: -202 pips
[/B]
We first sold EURUSD at 1.5510 having identified a break of trend line support. We then added to the position at 1.3364 on a break of support/resistance level above 1.34. The pair remains confined in a falling channel with prices again testing higher again after another unsuccessful attempt to clear the 1.2453-1.2609 congestion area. A daily close above the channel’s upper boundary (now at 1.2732) would go a long way to confirming this as a medium-term bottom, but the bulls have failed to produce this as of yet so the bias remains bearish. On balance, the long-term trend points definitively downward so we will remain short, waiting for price action to resolve itself at the current juncture.
For more resources on the EURUSD, please visit the DailyFX Euro Currency Room.
[B]GBP/USD
Strategy: Flat[/B]
Last week, risk/reward considerations kept us on the sidelines as GBPUSD bounced lower from falling trend line support. The pair has now put in a Star candlestick above support at the previous swing bottom (1.3731), hinting at the possibility of a rebound. Alternatively, a daily close below this juncture could open the door for further downside. We will remain on the sidelines for the moment and watch for the close on the current candle for confirmation. Updates will be posted on the Candlestick Forum.
For more resources on the GBPUSD, please visit the DailyFX British Pound Currency Room.
[B]USD/JPY
Strategy: Pending Long[/B]
The bottom line for USDJPY is effectively unchanged since the pair broke higher out of a falling channel and negated a potential double top at 0.9467: the bias is shifting into bullish territory but risk/reward remains skewed against buying USDJPY at current levels, leaving us on the sidelines. On the bright side, the intensity of bullish momentum seems to be waning and the possibility of a corrective downswing looks increasingly plausible in the near term. We will remain flat, looking for a move lower to yield a long entry opportunity.
For more resources on the USDJPY, please visit the DailyFX Japanese Yen Currency Room.
[B]USD/CAD
Strategy: Long at 1.2188, Targeting above 1.3000
Weekly Profit / Loss: -73 pips
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We bought USDCAD as the pair rallied to break past the upper boundary of a bearish channel. Last week, bullish momentum paused at triple top resistance near 1.30 showing a Long-legged Doji candle and we noted that a pull back can reasonably be expected before the bulls regain the upper hand. Indeed, USDCAD retreated to support at the previous swing top at 1.27 and entered consolidation. We see this as corrective and will remain long expecting upward momentum to clear 1.30, opening the door for the next leg of the rally to reach above 1.33.
For more resources on the USDCAD, please visit the DailyFX Canadian Dollar Currency Room.
[B]AUD/USD
Strategy: Short at 0.7079, Targeting 0.6072
Weekly Profit / Loss: -70 pips[/B]
We sold AUDUSD as the pair showed a Hanging Man with bearish confirmation. Recent trading has seen the pair consolidating above support near the 0.63 mark to form a Falling Triangle pattern. This is typically indicative of continuation, bolstering the case a breakdown as directional momentum resumes in earnest. We will remain short, looking for a close below support to signal the beginning of a push to support above the 0.60 level.
For more resources on the AUDUSD, please visit the DailyFX Australian Dollar Currency Room.
[B]
NZD/USD
Strategy: Flat[/B]
Last week we proposed that NZDUSD was showing a Falling Wedge bullish reversal formation, with an Inverted Hammer at support and positive divergence on the MACD oscillator as confirmation. Indeed, prices pushed higher through wedge resistance to pause for consolidation ahead of 0.5047, a key axis that has acted as support and resistance since early February. We will remain flat for now as the pair offers confirmation on where prices will proceed from here. Updates will be posted on the Candlestick Forum.
For more resources on the NZDUSD, please visit the DailyFX New Zealand Dollar Currency Room.
[I]To contact Ilya regarding this or other articles he has authored, please email him at <[email protected]>[/I]