Forex Analysis & Setups on the Majors

Today’s post offers a glimpse of the market prior to FOMC statement, which could easily dominate this week’s trading. The FOMC statement will be released on Wednesday afternoon (ET) and might set out the USD direction for the remainder of 2014. Let’s review the majors one by one.

USDJPY UPTREND TO CONTINUE

The USDJPY uptrend has moved 1,200 pips in less than a month. That is an impressive figure but could more be on the way?

  1. Considering the strong bullish momentum supporting the uptrend and the lack of weakness in last week’s weekly candle, the chances of more upside are still high.
  2. However, the USDJPY has divergence between the tops and has bearish 4-hour engulfing twins, which could indicate that a correction is on its way.

17- 11- 2014 uj

A bullish trend continuation seems likely but only after a decent correction. The support zone (chart above) seems the most likely turning spot for the uptrend continuation but I will await candle stick patterns as a confirmation of a turn back up. Also the RSI close to oversold levels could help confirm the turnaround spot. A stop loss below last week’s low and a target at the top of the channel seem like the most conservative settings for the moment.

EURUSD RETRACEMENT?

The EURUSD made a false bearish break (candle wick) of the wedge (purple) before making a bullish breakout. Is the bullish break a reversal?

In my analysis the break out north does not mean a high likelihood of a reversal.

  1. Price is still heavily in a downtrend (below magenta lines);
  2. The Fibonacci retracement levels (green) can easily stop this retracement and place price back in the downtrend;
  3. In fact, there was already a shooting star at the 50 Fibonacci retracement level (orange circle).

I am keeping my eye on a EURUSD short from either:

  1. The 61.8 Fibonacci retracement (green);
  2. The break of the support trend line (blue);
  3. The retest of the 50 Fib and lower resistance trend line (magenta).

Stop losses could go above the top, 78.6 Fib, the more aggressive 61.8 Fib, or above any candle stick pattern. The main target for now is the 1.2250 (-27.2 target).

17- 11- 2014 eu

GPBPUSD PULLBACK?

The GBPUSD also remains firmly in the hands of USD strength trend and the Cable is not able to escape bearish control: price is making lower lows and lower highs and remains well below the moving averages.

I am expecting a turn around at any of the Fibonacci retracement levels (green) for more downside and I will look for a bearish candle stick pattern for that confirmation. A stop loss above the top with a target aimed at 1.55 (-27.2 Fib) seems like conservative trade management. There is a possibility that a wedge could occur. In that case I would wait for the bearish break of the wedge.

17- 11- 2014 gu

What do you think of the majors? What entry levels are you thinking of?

Let us know down below in the comments section!

Thank you for sharing and wish you Happy Hunting!

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