How have last week’s major economic data and statements from the Euro zone, Great Britain, and USA impacted the technical analysis outlook in the Forex? The good news is that no matter how the news release is interpreted by fundamental experts, technical analysts & traders can simply understand the impact it had by analyzing price. Let’s start with the EURUSD and analyze if the golden triangle is present on this currency pair.
EURUSD CORRECTION THEN UP
The EURUSD made large gains versus the US Dollar especially on Thursday. The US NFP and unemployment figures were released one day later (Friday 7th) but those events did very little to alter the bullish structure.
The USD did strengthen somewhat during the day but the EURUSD downside was small in comparison with the upside, mainly because price failed to reach the 38.2% Fibonacci retracement level.
Simply put, the EURUSD remains nestled in an establish uptrend (blue channel) but a bigger correction does seem overdue. Why? Price has reached strong resistance levels such as the daily top (red horizontal line) and the top of the channel (blue). A correction down to any of the Fibs (blue) for a bounce back up seems the most likely scenario at the moment.
In the case the resistance does break as expected, then [tweetable alt=””]Fibonacci upside targets come into vision such as the psychological 1,40 level, various targets at 1.4150 and the bigger 78.6% weekly Fib at 1.43.[/tweetable]
The structure of the Cable is certainly different than the EURUSD. Here are the main differences:
1) First of all, the upside was not nearly as strong. The break out trade above resistance (green) hardly developed at all before the NFP news event.
2) Secondly the downside retracement during the NFP release was a lot stronger with the GU than EU.
3) Thirdly, the triangle support line (purple) got broken and the Cable is retracing to lower levels.
So despite the strong upwards momentum, price failed to continue with the uptrend and is now making a bigger correction. The main question is: how far and how long will the retracement last?
Despite the turn of events and current bearish momentum, the key levels are still the Fibonacci levels such the 38.2% (for 2nd time) and the 50% Fib. These are the main areas to watch for as the downside momentum could easily last till then. A break below the 50% Fib however would certainly start to alter the structure…
USDJPY BULLISH REBOUND
The USDJPY finally broke a tight range of 200 pips last week. The bullish weekly candle is increasing the likelihood of upside but there are some resistance levels to reckon with before uptrend continuation has more space.
A break above the 4 hour resistance trend line (purple) would increase the chances of upside till the next resistance which is the top and monthly resistance trend line (blue). A break above that would indicate that the Fibonacci targets are the next levels in vision.
Which major currency pair do you find most interesting? Are you waiting to enter any of these pairs? Let us know down below in the comment section!
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