When reviewing the Forex power indicator of today and comparing it with yesterday (see here), some interesting differences become noticeable:
- GBP gained strength;
- JPY became much weaker;
- AUD also weakened;
- USD, CHF, EUR, CAD stable.
With the Forex power indicator you instantly see the dominating and weaker currencies. By pairing the weaker and the strong together you can trade the currency pair which has the most price movement. This saves effort and time, shortens analysis and simplifies your approach.
The neat part is that our website automatically combines the strongest with the weakest and shows the currency pairs with the largest difference. At the moment it ranks the pairs like this:
- USDJPY buy (details here)
- AUDUSD sell
- EURUSD sell (details here)
- USDCAD buy (details here)
- GBPJPY buy
Obviously we, as Forex traders, must then analyze each pair and judge for ourselves whether one of the currency pairs is indeed ready for trading. But looking at the website certainly saves a lot of time when scanning the charts for the best pair of the day or week…
The USDJPY, EURUSD, and USDCAD have already been discussed recently, so today’s focus is on the AUDUSD and GBPJPY.
AUDUSD TRADE DETAILS
Simply put, the charts confirm that the AUDUSD is in massive downtrend. Recently the currency pair made a sizeable consolidation zone, which is marked by the orange and green trend lines.
But price managed to break the support trend line (green) and it is now back in the downtrend. This is a trade we mentioned in the WET blog (read here).
Short setups are definitely the preferred trades for the AUDUSD, but from where?
- Shorting NOW does not seem lucrative considering that the bigger daily bottom (purple) is nearby and price could easily turn back up at support;
- Shorting at the broken support does offer enough space (red). A pending order entry around 0.7775 with a stop loss at 0.7865 and targets at 0.7625 and 0.7450 looks decent.
- Shorting below the bottom (purple) also offers space (dark red). A market order entry once a daily candle closes below the bottom (purple) and near the daily low with a stop loss above the breakout candle high and a target at 0.7450 looks the best.
GBPJPY POTENTIAL SETUP
First of all, it has to be mentioned that the GBP could be impacted this week by Bank of England’s Governor speech.
But from a technical point of the view the GBPJPY looks like a ‘mixed’ bag due to its many strong ups and downs (arrows) and its most recent breakout failure (red box).
Price however did manage to bounce back up (blue arrow) at the broken resistance trend line (orange) and previous support (blue line).
Despite the bounce, the market still seems to be stuck in a consolidation when I review the 4-hour chart. And price is currently in the middle of that zone.
Simple conclusion: this pair is NOT appealing to me…
And there is nothing wrong with not finding a setup on a pair if you do not like the chart.
For those readers that are charmed of this pair, then personally I would wait for price to hook back down to support (blue circles) or break above resistance (green circle) before looking for long setups.
What do you think of the AUDUSD and GBPJPY?
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