Hello Forex Traders,
Finally the USD weakness saw smaller continuations in yesterday’s Forex trading and the market “loosened up” after a very tight and narrow range in the first 2 days of trading. What can w expect in the last 2 days of the week? More on that below!
Before we dive into the usual business of technical analysis, I recommend viewing these links:
1) Handicapping the Jobs Report -> an interesting guide on what to expect on today’s unemployment claims
EU & GU CONT?
Both the GBPUSD and EURUSD broke out of the corrections yesterday, which was already 1 week after FOMC’s huge surge up. Will we see any follow through of yesterday’s bullish day?
I think yes. A bullish continuation seems very likely at the moment.
When looking at the daily chart on the GBPUSD we can sum up the following:
1) Major resistance at 1.6180 with yearly high, 886 Fib, weekly trend line
2) Big FOMC up day, but down days on 1st two days after FOMC
3) Monday & Tuesday small daily candles
4) Finally Wednesday engulfing bullish candles
A small retracement of yesterday’s daily candle could happen, and if it does then it should encounter support and push up. In fact, our trading room has a long trade setup at the 500 and 618 Fib of this daily candle.
Any upside should see continuation to retest the trend line and 1.6180 top but there is no guarantee of a break out of the weekly resistance (above 1.6180).
The EURUSD has a very similar structure as the GBPUSD. It too seems well set for upside continuation today. But with the EU there is one major difference: the long term resistance has partly cracked.
Price action of the EU is above the weekly trend lines and therefore a break above the 1.3565 top of last Thursday has a higher chance of breaking.
In that case, the next targets and potential resistance areas are:
1) The 886 Fib at 1.36
2) The -0.272 target at 1.3640
3) The weekly top at 1.37
4) The -0.618 targets at 1.3850-80
So far the difference between the high and low of the weekly candle has been +/- 80 pips. This week’s volatility has been very low, especially when compared to last week’s big bullish candle. That bullish candle is begging for continuation. Let’s see if it happens today. The chances are high the continuation should happen today, otherwise Friday’s are often enough reversal days and the last day of the month (Monday) is also not usually an ideal break out day either.
The market structure is telling me that there is a high percentage this will indeed materialize and unfold, and that is why the Winners Edge Trading account is in a long. Fingers crossed for the successful development of this trade. But always realize that one trade is just one trade and never defines us or our strategy of course.
Thank you for reading this article and sharing it and wish Good Trading today!
Let us know down below if you are in any trades? Are you planning to take trades? Did you make pips on our GBPUSD long trade call? Did you trade other pairs?
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