As expected the Forex market slowed down to a “snail’s” pace last week… and with a huge list of Bank Holidays lined up yet again for this week, the market movements will be an exact copy of last week: mostly flat with the potential for some small or mild ups and downs.
Of course, this does not hinder Forex traders from staying focused and prepared. With only 2-3 trading days left in the year 2014 (depending when you read this), Forex traders will soon know the yearly highs, lows and closes and we can look for the start of a brand new trading year.
Are there any potential trade setups in the remaining couple of days?
The EURUSD bearish momentum (red arrows) could encounter hefty opposition as price reveals bullish engulfing twins (green circle) at a potential double bottom (purple circles).
Furthermore, price is also at the bottom of a monthly wedge which could easily become a stalling spot and price will go sideways for a lengthy time OR price can actually bounce up for a rebound and retracement.
Considering the lack of space to the downside (support at weekly wedge – green line), I am not looking for short setups this week. I might consider an intra-day reversal setup to the upside during the week (with smaller risk than usual) but only if sufficient confluence is visible.
The Cable consolidation (purple box) lasted for longer than a month before a break finally occurred. The bearish breakout has not been very convincing so far. Price is knocking on the bottom of that zone, which is now resistance.
A break back into the consolidation could easily see price retrace back to the top of the zone. A break below support should indicate that the currency pair is likely making a break, pullback and continuation.
Although I am not a big fan of the Cable at the moment, I will keep an eye on interesting signals that give confirmation of the 2 potential setups. As always towards the end of a trading year, price could also easily go sideways and flat as well.
The USDJPY rebounded back upwards strong and quick (green arrow) but with a top close by (red line) and a sizeable bearish momentum (red arrow), any bullish setup really does not interest me at all at the moment.
The USDJPY remains in a strong daily uptrend so I prefer longs which are with the trend rather than reversal shorts. However, I am only interested in trading it up if price gets closer to support and indeed bounces there. I am waiting for any of these 3 viable long options:
- Price breaks top by 100 pips or more and then hooks back to the broken top which is now support;
- Price bounces at the 78.6 Fibonacci retracement level (blue) at 116.69;
- Price bounces at the 38.2 Fibonacci retracement level and -27.2 Fibonacci target confluence at 113.80 (not on chart).
If any of the 3 scenarios unfold then long setups seem to provide interesting potential for catching more pips in the USD strength and JPY weakness trend.
Are there any currency pairs that seem interesting to you or will you skip trading this week? Let us know down below!
Wish you a great trading week ahead, but be extra cautious of the holidays and end & New Year slow down.
Thanks for sharing and Happy Hunting!
Winner’s Edge Trading, as seen on: