The market movements have shifted into their lowest gears as the EURUSD, GBPUSD and USDJPY almost grinded to a complete halt last week.
- The difference between the high and low of the EURUSD weekly candle was only a mere 70 pips;
- The GBPUSD beat the EURUSD by 7 pips to post a weekly range of 77 pips;
- Whereas the USDJPY closed with a 76 pip candle.
Daily candles are usually wider than that. Tight ranges like this are extremely difficult to trade and making a profit from these low levels of volatility is certainly a very challenging prospect. The big news events this week on the ADP and NFP for the US could alter that environment, but it might be a very concentrated volatility mostly driven by the news events.
There is still plenty of time until those events occur so are there any pairs which are trending at the moment? Let us review our valuable DTT trend indicators and let them be the judge.
When scanning all of the charts and various currency pairs, the CHF, CAD, JPY, USD, EUR, AUD, and NZD pairs all seem neutral. The only trending pair currently is the GBP… So with that filter in place, let’s review some of the GBP pairs.
CABLE ASCENDING WEDGE
The GBPUSD has clear high lows and remains solidly in the uptrend channel (purple line), but was unable to break above the resistance levels (red lines).
Seven days of sideways price action has translated into a tight range right at the resistance and created clear lines in the sand for both the bulls and the bears. At the moment though the bulls seem to be winning the contest as today’s price action has clearly been very bullish so far.
Whether this price action will turn out to be false break out or a sustainable break out is a question which will remain answered today.
- A daily candle close or several 4 hour candles above the resistance zone would increase the probability of sustainable break out.
- Big wicks on the 4 hour charts or a daily pinbar would support the false break out camp.
If the break out to the upside does materialize then the next upside target is 1.6970-1.70 and later on even 1.80 (read more here).
The GBPCAD daily chart has a very similar bullish structure as the GBPUSD daily chart – if not more bullish. Obviously the uptrend struggled significantly in the last few months as it posted a massive corrective zone ever since the end of January. But with the recent bounce off of the orange support trend line, the structure could easily turn out to be an ascending wedge as well.
Therefore traders are best advised to keep a close eye on the red resistance lines and the orange support line. A break of one of those could indicate to which direction the breakout could occur.
The third GBP pair which is trending at the moment is the EURGBP. This currency pair however usually has both a daily and weekly tight range and is therefore certainly not my favorite choice. At the moment the EURGBP is trending down and we are seeing GBP strength against the EUR as well. However considering the choppy price action and the proximate of the support level, then I am inclined to wait on the side lines for more information.
Which GBP pair do you like the most at the moment?
Thanks for sharing this article and wish you Happy Trading!
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