Hello Forex Traders,
The next 2 trading days will be packed with news events. The most eye catching releases are the EUR and GBP interest plus the NFP figures and unemployment rate in the US. Also FED chairman Bernanke is speaking tomorrow afternoon (EST).
Today my focus will be on trend lines. Hope you will enjoy it and find it useful. Please drop a comment down below – thanks! Here is yesterday’s article with long-term charts.
The EURJPY made a very deep and impulsive move down. BUT this could be less bearish than the thrust could make us believe:
1) The down move has brought price back to the bottom of the daily trend channel.
2) Price also bounced off of the -618 target at 132.43.
Price would need to break the green line for upside acceleration. Downside is only interesting upon break of the trend line as well and is limited in its potential as the trend channel could act again as support.
The USDJPY too is looking for a potential upside break. The UJ is even more bullish in its structure than the EURJPY because it did not have a major downside thrust plus price is working itself upward in a neat trend channel (blue).
The break of the trend line (green) would provide us the confirmation of a breakout trade to the upside. The target is the top of the daily wedge (magenta).
Make sure to take a look at this video which explains our Double Trend Trap Trades. The USDJPY upside break is one of them which is on the list.
The EURUSD could have extra volatility due to the interest rate announcement. From a technical point of view the EURUSD is making a correction after a very sturdy and strong fall from 1.3830 to 1.3450.
One more downside is definitely possible and a break of the trend line (green) would confirm the break out trade. The -272 at 1.3420 should be the target because upon the break of the bottom there is a high chance of divergence which would limit the downside momentum.
Another possibility is that price bounces off the trend line and uses it as support to correct higher. In that case the upper trend line (purple) would be resistance. Obviously the trend changes from down to up once price were to break through that upper trend line (purple) and then use it as support.
The Cable has a different structure than the EURUSD: it has gained quite a lot of upside momentum. The pair however did top out at the 61.8% Fibonacci retracement.
If the GBPUSD has enough power to push through the trend line (green), then an upside breakout trade could be well setup and materialize. The target of the breakout is the next Fib level at the 78.6% retracement.
Any downside trades would only be interesting in my opinion once the currency establishes lower highs and lower lows.
Also the GBP has an interest rate decision ahead of itself so please be careful with trading the Cable before, during and just after this news event which could bring a lot of volatility and spikes with it.
Thank you for reading and sharing this article on Forex break outs and trend lines. All comments are greatly appreciated! Wish you Good Trading.
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