Major Bounces Or Breaks

With the end of March approaching quickly the first quarter of 2014 is also near its closure as well. What price action can traders expect for the last part of Q1 ’14?  What lasting affect did the surprising FOMC statement have on the USD and the majors? Let us know what you think down below in the comments section!

EURUSD

During the FOMC statement and press conference the EURUSD faced bearish downside pressure which lowered the exchange rate of the currency pair from the 1.3920 zone to 1.3750.

24- 3- 2014 eu 4

Here are in my opinion the most important observations:

1)      The EURUSD broke the smaller intra-day triangle (magenta) to the downside

2)      The EURUSD broke the intermediate support trend line (orange)

3)      The downside stopped at a confluence of target Fibonacci levels (blue Fib) and support Fibonacci targets (orange Fib)

4)      The next support trend line (magenta) is a daily trend line and is certainly decent amount lower

Whether this EURUSD downside is just a retracement for more upside or a start of the reversal still remains to be seen, [tweetable alt=””]but as long as price stays above the daily support trend line then eventually more daily upside seems likely.[/tweetable] That does not mean that this current week could have bearish corrective pressure down to the 50% or 61.8% Fibs at 1.3720 – 1.36600.

GBPUSD

The Cable daily chart has an interesting formation due to the fact price is at the bottom of the uptrend channel. These are clear bounce or break spots.

24- 3- 2014 gu d

Simply put, a break lower would place this daily uptrend (since July 2013) in the freezer but a bounce up could keep the bullish aspirations of the Cable alive.

Also there is a 61.8% Fibonacci retracement level which has a good chance of acting as support.

When zooming into the lower time frames, such as the hourly chart, a confirmation of a smaller bounce would occur when the GU manages to break above the downtrend channel and resistance lines (multiple reds). Price could make a recovery up to the next resistance trend line (purple) which in turn becomes a break or bounce spot as well. In my opinion, this could be a major bounce spot for more downside. Time will tell how everyone’s Forex Journey continues.

24- 3- 2014 gu 1

USDCAD

The Cable and EURUSD are certainly far from a trending mode – also according to our DTT trend indicator. The USDCAD is a whole different story.

After price bounced at the 61.8% Fib (blue circle), the break of the bullish triangle (magenta) has seen decent momentum and follow through. Price went up to hit the initial targets (-27.2% and -61.8% Fib levels).

After Friday’s retracement price seems to be ready for more upside continuation. The 1 hour chart is showing 2 trigger candles and a break of the trend line (purple).

If you are looking for more information regarding the longer-term target of this triangle, please take a look at this article “Trading FX Triangles Simply.”

24- 3- 2014 UC D

Thank you for sharing this article and wish you Good Trading!

Oh, and don’t forget to drop a note in the comments section!

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