Hello Forex Traders!
With the interest rate reduced in the Euro zone and the better than expected NFP figures and unemployment rate for the U.S., there could be substantial reasons for Forex traders to anticipate support for the USD from the fundamental point of view.
Will this data encourage the FED to (slowly) introduce tapering?
Only time will tell… But those odds are surely – at minimum slightly – increasing. As technical traders, however, we are always looking for confirmation of our view via technical analysis. And the technical are surely confirming this USD bullishness.
The EURUSD and AUDUSD had bearish weekly candles, whereas the USDJPY had a bullish weekly candle. The only one that did not follow along was the GBPUSD.
Let us take a look at the majors one by one.
EURUSD broke the weekly support trend line (orange) and horizontal line at 1.3460 (light green) with lots of force and thrust and a bearish weekly candle.
The candle itself had roughly a low at 1.3290, a close at 1.3270, an open at 1.3500 and a high at 1.3520, which indicates that approximately 80 out of the 230 pips of the bearish candle was a wick. The wick was therefore roughly 33% of the candle, which indicates that – although the candle was bearish – the sellers could not remain totally in control throughout the week. This could increase the likelihood of a retracement before further fall.
Any retracement will most likely not break last week’s high at 1.3520 or the top of the 1 hour down move at 1.3550, which is equal to a -618 target as well. The -0.272 at 1.3492 could be the turning spot for more downside as well.
The target of that downside is the 1.3150-1.31 price zone, which is next’s weekly support level. Once that support gets broken, then next weekly support is around +/-1.2750 area.
The USDJPY rebounded back up as fast as it fell. Is it finally able to break through the top of the weekly wedge (magenta) and confirm its potential bullishness? Any break up could see continuation to higher levels such as 100 and then 100.60. Once the 100.60 level were to break then the currency could see lots of space up to the daily top at +/- 103.76 and the targets at 110 and potentially higher.
The GBPUSD is the only currency mentioned in this article that did not have a weekly candle with USD strength. The Cable was not able to break through the weekly support at 1.5890 and has used that support level as a bouncing zone for more upside correction.
In fact it could still correct to higher ground. In that case the 78.6% and 88.6% Fibonacci retracements are still major resistances which could send this Cable back lower.
A break below the wedge (light green lines) could confirm the overall bearishness. Although an actually break of the weekly support at 1.5890 would be really needed to end all doubts.
Do you agree that the USD is a buy on dips? Would be looking to see the EURUSD at 1.35 and the GBPUSD at 1.6180 as well? Let us know your opinion down below!
Thank you for your reading and for sharing this article! Wish you all Good Trading!
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