Last week EURUSD showed a Long White Candle following a period of indecision (noted by small candle bodies with long wicks) after the initial bounce at trend line support. We felt this meant the bulls had retained the upper hand in the near term, with the next move favoring a return higher to test recent range resistance below 1.5800. We opted to look for a short following the pull-up to trade the range in the direction of our overall bearish bias. Price action validated this analysis, with Euro ending last week just below the 1.58 level.
[B]EUR/USD[/B]
[B]Triple top in place?[/B]
Last week EURUSD showed a Long White Candle following a period of indecision (noted by small candle bodies with long wicks) after the initial bounce at trend line support. We felt this meant the bulls had retained the upper hand in the near term, with the next move favoring a return higher to test recent range resistance below 1.5800. We opted to look for a short following the pull-up to trade the range in the direction of our overall bearish bias. Price action validated this analysis, with EURUSD ending last week just below the 1.58 level.
With the aforementioned scenario developing as we expected, we will retain last week’s strategy as-is. We will look for the pair to confirm a triple top below the 1.5800 level and go short eyeing a return lower to 1.5400.
[B]EUR/USD Strategy[/B]
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Short EURUSD below 1.5800 on confirmation of a reversal.
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Set stop loss near 1.5945.
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Set profit target just above 1.5400, risking 145 pips to gain 397.
For more resources on the EURUSD, please visit the DailyFX Euro Currency Room.
[B]
GBP/USD[/B]
[B]Working through resistance[/B]
Last week we saw GBPUSD push above the downward-sloping channel that has guided the pair since mid-March. The rally stalled just below a multiple support/resistance area at 1.9960. With price action in close proximity to a significant resistance level, we opted to hold off from an outright long position at the channel’s break. The bullish run proved to have momentum, pushing decisively higher through resistance to close the week just below the 2.00 level.
Looking ahead, we see a significant multiple support/resistance level near 1.9960. We have seen substantial reversals here before. We will look for signs pointing to a shift back to downside momentum on a test here, targeting a pullback below 1.98.
[B]GBP/USD Strategy[/B]
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Short GBPUSD below 1.9960 on confirmation of a reversal
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Set stop loss near 2.0059
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Set profit target above 1.9400, risking 99 pips to gain 198.
For more resources on the GBPUSD, please visit the DailyFX British Pound Currency Room.
[B]USD/JPY[/B]
[B]Retrace offers entry[/B]
Last week, we identified USDJPY as showing an Advance Block bearish reversal formation with down candle confirmation, suggesting a move lower. Price action validated the signal, descending below 108.00. We concluded that the likely scenario was a retrace to trend line support near 106.00, with USDJPY reversing here as the rally regains momentum. Price action validated our assessment – USDJPY pulled back to end the week at the intersection of the aforementioned trend line and a multiple support/resistance area near 106.00.
Currently, uncertainty about our bullish bias has been prompted by an extended Evening Star candlestick formation. That said, the trend line has not been breached, meaning the upward trend is still intact. We will hold off on rushing to take a position for the time being, waiting to see what happens at the critical 106 level.
[B]USD/JPY Strategy[/B]
We remain flat, waiting for confirmation. Updates will be posted throughout the week at the Candlestick forum.
For more resources on the USDJPY, please visit the DailyFX Japanese Yen Currency Room.
[B]USD/CAD[/B]
[B]Building foundation for upward push[/B]
Last week, we identified USDCAD as consolidating in a large Triangle formation. We noted that resistance was overcome in the beginning of June, followed by a brief rally and retracement back to trend line resistance-turned-support. A bullish Hammer candlestick suggested a rally was about to commence. Still, we chose to err on the side of caution and wait for the Hammer to be confirmed by a bullish close in the current candle. Price action did not yield confirmation – entry conditions were not met and the trade was not triggered.
The start of this week sees USDCAD in much the same place as the last. Price action has been choppy around Triangle resistance-turned-support as the pair appears intent on forming a solid bottom before advancing higher. With positioning largely the same, we continue to hold a bullish bias. We will look for definitive signs of a reversal in the candlesticks at support to enter long. While our initial target will be modest in aiming for recent highs, we think the fundamental back-story is supportive of a protracted rally.
[B]USD/CAD Strategy[/B]
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Long USDCAD above 1.0080 on confirmation of bullish reversal
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Set stop-loss near 0.9973.
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Set target below 1.0325, risking 107 pips to gain 245.
For more resources on the USDCAD, please visit the DailyFX Canadian Dollar Currency Room.
[B]AUD/USD
[/B]
[B]Bearish momentum to resume[/B]
We have been calling for AUDUSD downside since the pair broke beyond a bullish trend line that had supported price action since 8/17/07. The initial decline stalled above 0.9320. We expected a bounce here to retest trend line support-turned-resistance offering entry for a short trade.
Current positioning finds AUDUSD positioning in much the same place it has been in recent weeks. As we suspected, price action has retraced to trend line support-turned-resistance and has stalled there. Resistance is compounded by the top boundary of the range that confined AUDUSD through the latter half of May and early June at 1.9628. The pair has not closed above this level in over 20 years, making it a very substantial hurdle. The confluence of upside barriers currently in place suggests the downside scenario remains our best bet in the coming days. Current positioning also offers excellent risk-reward parameters for a short trade.
[B]AUD/USD Strategy[/B]
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Short AUDUSD below 0.9600 on confirmation of a reversal.
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Set stop-loss near 0.9683, above recent highs.
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Set target above 0.9320, risking 83 pips to gain 280.
For more resources on the AUDUSD, please visit the DailyFX Australian Dollar Currency Room.
[B]
NZD/USD[/B]
[B]Bearish momentum to resume[/B]
Last week we saw NZDUSD extend higher following a Morning Star formation at 0.7500, a level that corresponds to the bottom of a downward-sloping channel as well as a long-term bullish trend line that has held up NZDUSD since July of last year. We noted that price action was still quite far from threatening the overall bearish bias, suggesting the current upward momentum was a correction within the broader down move. Writing in a mid-week update, we noted that the rally had apparently lost steam with NZDUSD showing an Evening Star candlestick pattern. We suggested a short near 0.7576 with a stop-loss above recent wick highs at 0.7650 targeting 0.7428.
The Evening Star was followed by some limited downside, though an all-out selloff did not materialize. Our stop-loss was not hit, and the pair appears to be showing signs of consolidation. With no substantial signal to suggest otherwise, we will retain the short trade with the same parameters as given, eyeing a return lower in the days to come.
[B]NZD/USD Strategy[/B]
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Short NZDUSD near 0.7576 -
Set stop loss above recent wick highs at 0.7650 -
Set target at 0.7428, risking 74 pips to gain 148
For more resources on the NZDUSD, please visit the DailyFX New Zealand Dollar Currency Room.
** [B]NOTE[/B]: All open positions are closed out at the end of the trading week unless otherwise specified.
To contact Ilya regarding this or other articles he has authored, please email him at <[email protected]>