Hello Forex traders,
The Forex market seems to be setup in a similar fashion across the board. The Yen, Euro, Pound and U.S. Dollar have a trend on the 4 hour chart, but are encountering major support or resistance on a higher time frame.
The USDJPY, EURUSD, GBPUSD, and AUDUSD are therefore at a bounce or break spot. Will the trend be strong enough to push through the support or resistance? Or will the support or resistance be able to contain the trend and stop it from continuing?
With the FOMC statement release and press conference on Wednesday, that question might not be answered until Wednesday. In the meantime, let us analyze all 4 pairs 1 by 1 and analyze their individual cases.
The EURUSD has a major weekly / monthly top and its yearly 2013 high at 1.3830. This top is clearly a major and key level and price was not able to break through it last week.
The downside correction started out a bit impulsively but so far has not any major follow through. The recent price action is in fact more a bull flag chart pattern for more with the trend upside continuation.
Forex traders will need to be careful around these price levels. Both reversal and with the trend trades could work tremendously well, but could also fail tremendously as price might turn choppy and corrective both ways.
The EURUSD might become more tradeable when:
a) Price clearly breaks and closes above the yearly resistance / top (red) for uptrend continuation
b) Price clearly breaks and closes below the support at 1.37 (green) with impulse for downside reversal
The Cable breakout above the weekly resistance and now might be hooking back to the same break out levels (1.5250-1.5330). Price has already those former resistances this morning as a support level. The question: will the bounce be strong enough to see the uptrend continue?
If price breaks above the resistance line (red), then there is a good chance that the GBPUSD is back in its former uptrend.
If price breaks below the support line (dark green), then price could be reversing back down and the weekly upside breakout might be over.
UJ attempted to break its monthly top (as mentioned earlier) but utterly failed at its first attempt. I write first on purpose because the uptrend could easily challenge the resistance level one more time.
The break of the top did translate into a new yearly high (103.93) on the UJ, but the break was far from convincing. Here too price will need to break with clear candle closes above the resistance (red) before a serious trend continuation can be considered. Or, in case of a reversal, clear closes with good impulse below the support (green) before serious reversal opportunities are available.
Last but not least, the Aussie Dollar versus the U.S. Dollar. This currency pair has been in a grand down trend, but it too is approaching a key monthly level: support level at 0.8850. A break of that support level could mean that the currency pair can continue its downtrend towards 0.85.
In the meantime a continuation fall towards the bottom at 0.8850 seems like a decent probability. This could happen either upon the break of the trend line (purple) or when a deeper retracement back to any of the Fibonacci retracement levels. A break above the bottoms (red trend line) seems unlikely.
What are you looking for in the majors? Let us know down below!
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