Forex Weekly Technical Update
Greenback Hanging on Gains
The markets continued to consolidate for most of the week. The USD consolidated for the week, but ended the week on a high note The AUD/USD is at a critical support level, and the USD/CAD broke a declining resistance. Against the currencies of another low interest rate country, Japan, the USD however remains pressured.
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Simple Moving Average(SMA) 50-period (red), 200-period (bold, gray)
RSI-14 with Simple Moving Average 5-period of RSI attached.
Elliott Wave Principles
Market and Price Action (patterns, candlesticks)
Multiple Time-Frame Analysis
EUR/USD - Assessing Wave Count (Link)
USD/JPY - Hammering at the 85 Support; Noting Minor Resistance Levels
- Daily: The USD/JPY has not made it a recovery yet. The USD/JPY is evidence that even though it is gaining against some other currencies, it is weak when European economies are taken out of the equation, and when global economy is taken out of the picture. Against the Japanese yen, the USD's weakness can reflect its economic pressure.
- The 85.00 support has been holding, although the market reached down to 84.85 temporarily.
- If the market is to rally, it will see some resistance at 86.35, 87, and 88 respectively. These resistance levels will work with fibonacci retracement levels too.
- Therefore, a bullish signal can be generated if the market breaks above 88. There maybe a near-term bullish signal if the market breaks above 86.35, but if your outlook is bullish from this minor resistance break, the projection should not be above 88 for the time being.
- If the EUR/USD breaks below 1.2480 and if AUD/USD breaks below 0.8850, then the likelihood of the USD/JPY being supported at 85 is higher, and a rally above 86.35 would also be more likely.
GBP/USD Next Resistance near 1.63
- 4H and Day: The 4H chart of the GBP/USD may be in the same count as that of EUR/USD, where we may be in wave 5 of A. Therefore, the anticipation is for a B to occur next week. Wave 5 can be projected to 1.54.
- The daily shows that if wave 5 is longer, there can be support at 1.5330.
- A premature scenario for wave B then C looks at 1.5120 (50% retracement) as target.
- These scenarios are good, but keep in mind that the USD has been weak, and fundamentals may change the sentiments in the forex market quick.
- If you see the USD/JPY break below 85 and stay below, be caution against USD strength. This means, there may be more likelihood of a rally int he GBP/USD then a decline. Pick the wave to trade carefully. Maybe the USD/JPY's action near 85 will give you a clue to other crosses such as the GBP/USD.
USD/CAD Measured Moves are More Important Then Pattern
- 1H: It is not always the case, but it is the case with the USD/CAD that measured moves have proven to be the predominant targets for swings.
- As you can see in the USD/CAD daily chart, the market has moved in swings that is projected from a previous swing. The triangle was there but is an arbitrary pattern created by a narrowing of range. When the market broke below the triangle the range opened up.
- Now I think d is actually the wave that came to almost touching 1.01, and we are in the middle of wave e. The alternate count is highlighted. The reason for this alternate count, which is actually my preferred count is that wave a, b and c have been 2-wave swings. Staying consistent, wave d and e should also be 2-waves.
- The projection for wave e is the 1.0630 area.
EUR/GBP - A Bearish Outlook for the Euro
- Daily and 4H: The EUR/GBP pair is declining as expected, but not without a correction the first half of this week. The market may still be in sideways action for a little bit, but more likely, it is continuing the established bearish trend.
- The daily shows an intermediate target at 0.7840, while the 4H chart shows a swing projection in the short-term towards 0.8090.
AUD/USD Stalking Path to 0.94/0.95 area.
- Daily and 4H: My count for AUD/USD may be invalid if the market breaks below 0.8850. We may still be in wave 4, just not (IV). The internals confirm higher scale counts, but just because one internal scenario is incorrect, the higher scale count is incorrect.
- We may still find support at 0.8750 area (78.6% retracement), and the market may still rally.
- With that said, we do have to note that a rally is not high probability at the moment. The RSI broke below 30, then rallied and failed to break above 60 in the 4H chart. This signifies bearish continuation.
- The daily chart shows a possible head and shoulder completing. A break and then pullback to confirm this pattern can project a decline towards the 61.8% retracement area at 0.8524. This may be further confirmed by a break below 0.8750.
GBP/JPY Breaking Above Congestion Pattern
- Day and 1H: The GBP/JPY pair is in a wedge pattern in the daily if the current support holds. Then we would finish D and go on to wave E.
- However, the market is trying to break below the rising support. We may have to readjust the dynamic support if the market breaks below but climbs back up as it has done so often. For such a choppy mode, patterns are created and broken all the time, just like in the USD/CAD's case.
- In the 1H chart, we see a decline following a Gartley pattern. This week, the market has been in a declining channel, which may be in wave d, to be followed by a wave e rally.
- If the market breaks above 133.70, then we may have the bullish scenario that is shown in the daily chart towards E.
- If the USD/JPY breaks above 86.35, and the AUD/USD breaks below 0.8850, the GBP/JPY has a higher likelihood of rallying and breaking above 133.70.
Commodity Trading Advisor
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analyses.