Interesting analysis but the outcome was somewhat different. C’est la vie.
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Hi Diabolo, yes you’re right i didn’t mention we could have a breakout to the upside which in fact is why i didn’t trade this pair as there wasn’t confirmation of the right shoulder for the H&S pattern to come into play. What we had instead was a break-out and re-test of the upper-side of the wedge - we could see a continuation of this bullish price action towards the 1.025 level from here.
Stephen W
I am a Technical Forex Trader & Analyst.
Hope everyone had a refreshing week back in the markets after a splendid Easter Bank Holiday weekend! Now we’re back to business…here’s my technical analysis review on AUDUSD.
Daily –
(source:uk.tradingview.com)
Looking from the daily perspective we’ve seen price action within the market fall pretty much for the whole of 2018. With over 11 months of bearish movement, we finally saw a bullish breakthrough of the descending trendline resistance but price was rejected by the 0.74 support/resistance zone alongside dynamic resistance of the 200EMA. It was at the beginning of this year (2019) where we saw the market drop to its lowest point since January 2016 around 0.67480, however, the market was unable to close this low and pulled back to form a huge daily pin candle. This also led to the weekly candle closing as a very bullish pin bar and finding a real support zone around the psychological whole number of 0.7.
(source:uk.tradingview.com)
From today we could expect a bullish reversal within this market for the Aussie Dollar to recover some of its bearish movement from last year’s downfall. We can also see price tried to break below the 0.7 support zone once again towards the start of March but was unable to pierce through and close, as well as yesterday where we had the market attempt to break for the third time but pulled back to close as a daily doji pin - signalling that the bulls may be prepping to take over the market. Let me move down to the 4 hour time frame and show how I’ll look to enter and exit this Buy position.
4 Hour –
(source:uk.tradingview.com)
Getting closer to the action, I’ve been sitting on my hands all week waiting for a set-up to occur, focussing on how the market will react to the 0.7 support zone. Following yesterday’s daily close the market has given me confirmation to enter this trade (along with other strategy criteria of course) - I’m looking to trade this pair Long back up towards previous highs of 0.72. However, I’ll look at an initial profit target of the 0.5 & 0.618 Fib levels and see how the price reacts within this area, if we see a breakthrough - I’ll hold until the 0.72 profit target, if I see a rejection - I may look to close the position in profit. Although always remembering no one can predict the movements of the markets and we could still see price completely tumble through this level and continue to the downside.
I’ve drawn in a couple of scenarios displaying where I’ll be looking to exit this Long position, as well as where the market could head if the bulls can’t take control from the bears.
Let’s see how this plays out…I look forward to your thoughts.
Disclaimer: Any statements non-factual in nature constitute only current opinions, which are subject to change. The information presented in this article is not a specific buy or sell recommendation and is presented solely for informational purposes only. Not to be taken as financial advice.
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Looks like a great opportunity. US dollar is making some interesting moves which may help you out with this one.
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Thanks Jack. Yeah, DXY is currently the highest it’s been since May 2017, so i can envisage either a reversal or pullback to the downside at this level.
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Great analysis and I agree with your conclusions. Looks promising.
best of luck.
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Thanks Diabolo, let’s see how it plays out… So far so good
How are you approaching this trade with the Fed interest rate coming out this evening at 19:00 GMT?
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Will be interesting to see how this plays out over the next few days
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I will be looking to go risk free prior to the news release, however if i’m happy with the profit my trade is in when the times come, i will close for a profit - wait for news and reassess 
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Agreed Liam, will also be interesting to see how the market reacts to the FED interest rate later this eve
Stephen W
I am a Technical Forex Trader & Analyst.
Trading the Forex markets on behalf of Samuel and Co Trading in Watford. I am a Technical Trader, here to take on the game and turn the sceptics into believers. Join my journey as I release weekly technical analysis and trade breakdowns - opening the floor to feedback and conversation. I look forward to engaging with you all.
USDJPY - Yen Will The Dollar Go Up?
In this week’s Technical Analysis Article, I’m focusing on USDJPY. Working from a top-down approach I’ll assess the monthly chart before swiftly moving closer into the action to see what outcomes we could see within this market over the coming days/weeks.
Monthly
As you can see the market has been forming within a bullish style pennant that occurred after a huge 2.5 year bull run that began towards the back end of 2012. It was around June 2015 where price reversed and began heading to the downside until it found resistance at the key 0.5 Fib level - having tried to break through this area multiple times. The market since then proceeded to range within a pennant style formation, with the month of January closing as a pin bar rejection off the bottom of the ascending pennant trendline, along with dynamic resistance from the 200EMA (blue). Let’s move down and take a quick glance at the weekly & daily chart before moving to an intraday perspective.
Weekly
Daily
Here’s a snapshot of the weekly & daily charts with some support/resistance zones drawn in to give you an idea of how the market has been fluctuating within this pennant over the past few years. On the 4 hour chart, we’ll get a better idea of what possibilities we have within this market.
4 Hour
I have drawn in a newly confirmed trendline that has just had its third touch and rejection, potentially indicating a bullish continuation. Having pulled back, hit the trendline as well as bouncing off the 0.5 Fib level - this could lead to price rising back up towards the top of the pennant and 112.00 support/resistance zone. Let’s move closer into the action from an intraday perspective to see what outcomes may occur moving forward.
Here I’ve drawn in a few different scenarios we could see play out over the coming days and weeks.
Scenario A – We see the market continuing its bull run from the ascending trendline rejection and proceeds to break through the top of the pennant. From here I envisage a pullback to re-test the resistance now turned support off the top of the pennant and for the bullish momentum to resume.
Scenario B – Similarly to Scenario A the market continues to rise towards the top of the pennant but instead of a breakthrough the market finds a rejection at this level, reverses and heads back down towards the bottom of the pennant.
Scenario C – With this scenario the bulls can’t take control from the bears and price breaks through the ascending trendline to the downside, pulls back to re-test the underside of the trendline, before continuing its bear run down towards the bottom of the pennant.
I can see some great potential set-ups occurring within this market over the next few trading days but for now, the main aim to sit on our hands and await confirmation for entry to the buy or sell side.
Thanks for your time and as always – I look forward to your thoughts.
Image sources: uk.tradingview.com
Disclaimer: Any statements non-factual in nature constitute only current opinions, which are subject to change. The information presented in this article is not a specific buy or sell recommendation and is presented solely for informational purposes only. Not to be taken as financial advice.
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Any updates?
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Yeah we had a huge gap over the weekend, with being bank holiday in the UK yesterday too, i am awaiting for the market to pick up again before i enter any type of trade. Intrigued to see how it pans out
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In this week’s Technical Analysis, I’m looking at a potential Cypher pattern developing on Cable (GBPUSD)…
Firstly just a quick breakdown of what a Cypher pattern is for anyone not in the know; A Cypher pattern is an advanced pattern formation which some may interpret as Harmonic Pattern Trading and can be either a bullish or bearish set-up. It’s mainly based off of Fibonacci measurements for each point within its structure – which once complete allows you to enter the market.
Looking at Cable today and having done some analysis to see if it meets the requirements of a bullish Cypher pattern – we are almost at completion stage and are just awaiting confirmation to enter a Long position.
4 Hour Chart
This potential Cypher pattern began forming around the 24th April (2019) with the A & B leg completion forming around the 5th May. When we feel we may have discovered our initial rally (X to A leg), we pull out the Fib retracement tool to confirm if we have a B leg completion; which is confirmed if the market pulls back, touches or crosses the 0.382 Fib level but does not close below the 0.618 – as you can see, so far so good.
Now in order to confirm our C leg and positioning within the structure, we pull out our Fib extension tool and draw in from X to A back to X. To conclude our C leg, price must touch or cross the 1.272 Fib extension but cannot close above the 1.414 extension level – as you can see once again the market has met these requirements perfectly.
Here is where we are waiting for the Cypher pattern to proceed and complete its D leg - the good thing at this stage is we’re able to draw in the area that the market must reach in order for us place our long entry. To work out where our D leg needs to reach in order for completion, we place a Fib retracement from X to C and our completion level sits at the 0.786 Fib. If the market is to reach here, reject and form candle stick confirmation we can look to enter our long position.
This really helps to trade mechanically and take the emotion out of the picture – there is no ‘I think the market will do this’ moment - instead we are now working with probability rather than gambling. Below I’ll look at what profit targets we can aim for if this trade comes into fruition…
Lastly, we take our Fib retracement tool and place from C to D…
From here we look at a profit target 1 of the 0.382 level and a profit target 2 of 0.618 level, with a stop loss sitting 20(ish) pips below X.
• Profit Target 1 = Will give us around a 1:1 risk/reward ratio
• Profit Target 2 = Will give us around a 1.5:1 risk/reward ratio
Here’s how I’d look to manage taking profit during this trade; I’d wait for profit target 1 to hit and at that stage move my stop loss to risk-free, leaving me with no more risk on the table. I’d then proceed to monitor how the market reacts around the 0.382 level – if I see a rejection/reversal coming into action, I’ll close my trade in profit. Or if the bulls stay strong and price continues to break through profit target 1, I’ll be happy to hold (risk-free) until my profit target 2 is met.
At the time of writing this, the market still needs to fall around 80 more pips down to the 1.293 level in order to confirm our D leg completion. So for now, we stay disciplined, we stay patient and we let the market do it’s thang.
Anyone else have their eyes on this market or a similar set-up? I look forward to your thoughts.
Disclaimer: Any statements non-factual in nature constitute only current opinions, which are subject to change. The information presented in this article is not a specific buy or sell recommendation and is presented solely for informational purposes only. Not to be taken as financial advice.
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I would like to see more of these technicals fit onto real time charts. Looking forward to more of these from you Stephen
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Stephen what do you now make of the AUD USD trade. It has ben hovering around S for sometime. On my chart it has actually broken S and retested so I would interprit this as going on its downwad journey?
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Hi @Diabolo888, thanks for the question. Yes i agree it has been hovering around this support area for quite some time. One thing that didn’t help was the gapped market open last Monday. Since then has just been ranging and testing the 0.697 support area. I’d be sitting on my and at the moment and await a breakout and re-test. If the market breaks down through the 0.697 support area I’d wait for a pull-back, re-test to the support now turned resistance area and look to place a short entry upon confirmation. Are you currently trading it at the moment?
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Yes long but my hedge short has now kicked in so I will try to trade this out for breakeven or better.
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