Long-Term Forex Setups

Hello Forex Traders,

Yesterday we completed an EURUSD diagnosis. I want to keep the same tone but review more currencies shorter. Let us start with the Cable.

GBPUSD

The Pound Sterling versus the U.S. Dollar had a bearish monthly candle – contrary to the EURUSD which had a bullish candle with a major and decisive wick on top.

The bearish candle right at the top of a potential wedge (black trend line) and massive horizontal resistance (red) gives us a good indication that:

1)      we are at a bounce or break spot

2)      the probability is decent that we are bouncing off of the resistance back down

The confirmation level is last month’s low and the target – for the moment – is the bottom of the monthly wedge.

5- 11- 2013 gu m

USDJPY

The monthly candle was a doji, which was in fact the 3rd monthly doji in a row. Will there be a 4th?

Sooner or later a break out will occur. I am keeping an eye on both trend lines (blue) for a breakout to the upside or to the downside.

The downside target is limited to the 50% Fibonacci retracement level at 90.43. The upside target has more space and can reach up to 110, 120 or even 125.

5- 11- 2013 uj m

AUDUSD

The AUDUSD has a sizeable and substantial wick on top of its monthly candle – albeit the it still ending up bullish. For me these are the most important observations:

1)      A break of last month’s low at 0.9290 would be the confirmation needed before earmarking the downtrend back in play.

2)      If the currency were to keep pushing up then I still expect resistance at the Fibonacci retracement levels (purple box).

3)      If the downtrend does indeed continue, then I am expecting a move down to the –618 and -272 target confluence at +/- 0.83-84.

Let us add a non-USD pair to the analysis.

5- 11- 2013 au m

GBPAUD

For the first time since March this year the GBPAUD had a bearish month. The uptrend lasted a full 5 months and had an enormous upward thrust.

In the meantime a correction could take place. The break of last month’s low could – yet again – prove to be deciding factor when this correction can be confirmed.

The target of the downside could – from a monthly perspective – be limited temporarily to the broken tops on the left. Remember that broken resistance often becomes support in the future (dark red). If that were to happen then a bounce off of that support (dark red) could see the GBPAUD move up to the test the next resistance at 2.00 or higher.

Last but not least, let us add one “exotic” currency pair in the mix.

5- 11- 2013 ga m

AUDNZD

The AUDNZD has been in a tremendous down trend the last 2.5 years. How much longer can this last? The trend is your friend until it ends so the question is: are there any signs that Forex traders should bend with the trend?

Yes there are:

1)      The last 10 years price has used the 1.06 zone as a support and price is again close to it

2)      The currency has respected the 61.8% Fibonacci retracement level

3)      And it is now had several of months which are respecting its -618 target

4)      Price action is confirming a potential pause or turn around: 2 out of the 3 last months have been bullish.

5- 11- 2013 an m

That wraps it up for today! Dont forget to join our Trading room for the new trading in November!

Here is a great article from Nathan and also one from Tim!

Thank you for tuning in and wish you Good Trading!

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