We saw mostly sideways price action this past week, with much of this consolidation likely spelling out a continuation of the current trends already in place. USDJPY, a.k.a. my good friend the Yen, ended the week slightly higher, but very close to the middle of its current seven session range, with the immediate trend on the daily chart still pointed lower. As it did in late November USDJPY again found support on its 13-year bull trend-line, drawn from the monthly chart. Despite that long-term support line, I'm more inclined toward sell signals on the shorter-term charts, favoring what's happening now over what happened in the past. My first trading mentor Bill Williams taught me that mindset, and he calls it attending the church of what's happening now.
EURJPY ended the week slightly higher also while maintaining the immediate trend on the daily chart, which is lower. Unlike the U.S. stock market, which EURJPY tends to track, this market held above its November lows, as the Euro leg of this pair put in a strong performance following ECB President Trichet's hawkish interest-rate comments on Thursday. On the long-term and intermediate-term charts EURJPY remains in a sideways trading range, making this pair one to watch for a directional or trend trade, depending on which way it breaks out.
EUR closed higher on the week coming within approximately 50 pips of its all-time high settlement set in late November. EUR stalled just below last Friday's high at 148.25, setting up a possible double top on the intraday time frames, as well as the daily time frames when measured from the November all-time high. Some technicians are calling for 160.00, but in my mind resistance looms at 150.
Both AUDUSD and NZDUSD rallied this week to clear the sideways ranges they had been in over the past couple of weeks leaving them pointed at a climb toward their November highs. I apologize for lumping these pairs together in one paragraph as they certainly have their own personalities.
Barring GBP which is in a distinct down trend, most of the major currencies are in sideways, or consolidation ranges, which favor shorter-term trading strategies, and indicators better suited for this environment, such as stochastics and Bollinger bands.
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Happy Friday and have a great weekend!
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