Hello Forex Traders,
Two trading days remain in the year of 2013. What could we expect in these last few hours before the market closes for New Years day? Decreased volatility is usually the answer.
Parts of the world will be closed on the 31st and all countries and the Forex itself shut down on the 1st (holiday schedule is mentioned here). Also, not many traders are willing to risk their trading capital right in front of the year end closure.
Of course, when the Forex market closes the 2013 trading year, it will leave an imprint via its 2013 closing price, high and low. And then on the 2nd of January the market will awaken to a new playing field…
Tomorrow’s article will discuss the bigger expected Forex movements of 2014. What will happen with the Yen? And the USD? More on that tomorrow! For today we will remain focused on the intermediate picture.
Last week’s expanding wedge pattern (magenta) did initiate an uptrend continuation: the Cable moved from 1.6330 to 1.6580 after Christmas.
Although there is a big wick on the daily candle, this most likely has been created due to holiday environment where big movements usually see retracements first.
Above all, the Cable is entrenched in a strong uptrend channel (blue) and a continuation to higher levels seems likely until it reaches bigger resistance.
That resistance is possible at the next weekly top at 1.6750ish (brown) or the -27.2% target at 1.6650.
The Euro Dollar has a similar setup. It too had a gigantic move up and it too has a big wick on the daily chart.
Major difference is that price has not yet been able to sustainable break above the long-term resistances (red and magenta), but last week’s push certainly could have been a first attempt.
The overall trend is certainly up when looking at trend lines (purple) and trend channels (blue).
If the uptrend continues then:
1) the next Fibonacci target (blue Fib) is the -61.8% at 1.3985, which is also close to the psychological round figure of 1.40.
2) the major target, however, could eventually be all the way at 1.430, which is the 78.6% Fibonacci retracement level (green Fib).
The break of the weekly wedge (purple) has been powerful and impulsive, as expected in the trading room and Forex articles. The breakout has seen a great 4 hour trend emerge (blue channel) and now that the weekly top (red) has been broken, nothing seems to be standing in the way of a grand uptrend continuation.
However, a rising wedge pattern can be identified. Also, price is near the top of the uptrend channel. I would rather see price build a bull flag or triangle chart pattern before taking an upside trade again.
If corrective chart pattern does emerge, then a continuation of that uptrend can be seen to 107 and higher, maybe even to 110 or 111, which has bigger daily and weekly Fibonacci targets.
What are you expecting for the USDJPY? Please let us know down below.
Make sure to check tomorrow’s article and thanks for sharing this article.
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