Hello Forex traders,
A brand new week of Forex trading is ahead of us. Today our focus is price action on the weekly charts. What information are the weekly candle relying to us?
Until now the break of the support trend line (orange) 2 weeks ago did not receive any follow through to the downside. The EURUSD’s weekly candle was a decisive bullish candle in fact – as the close was near the high. Simply put, this means that bulls remained in control through the week, although the price movement was very choppy on lower time frames.
The short-term momentum seems to be up. But this upside potential could be limited as the movement could easily be a hook back to the broken trend line (orange) and respected trend line (magenta) for more downside.
In the long run I remain bearish unless price breaks above the horizontal resistance at 1.3830 and the resistance trend line (magenta), but this week there could be upside momentum as price retests the broken the resistances.
The Cable has a similar chart as the EURUSD. Double top and a bearish weekly momentum candle seemed to be classical signs of a reversal taking place. But the price action of the last 2 weeks certainly was far from bearish. In fact, last week quite a massive bullish turn around which the GU close just a few pips shy of last week’s high.
The question remains valid for this currency pair as well: is this upside momentum a hook back for more downside or will there be a break of resistance for a break out trade to the upside? Both are possible. In any case, this pair is at a bounce or break spot and sooner or later it will have to choose.
Last week was a bullish candle that broke through the triangle (top magenta trend line). This is the first confirmation of a bullish break out to the upside. However, more confirmation is needed such as a break above the horizontal resistances (red and brown) at 100.60, 101.60 and 103.50.
This triangle can be seen as a bullish continuation triangle of the previous uptrend for more upside. It could also be a bearish triangle for 1 more downside correction before resuming the uptrend. It is key to keep an eye on the resistances. Once price is above the big top at 103.50 then the chances of a big trend starting are high. The targets are 110, 120 and 125.
Contrary to the EU and GU, the Aussie did not have a bullish weekly candle but it did have a decent sized wick at the bottom. Price obviously respected the weekly bottom at 0.9290 and failed to break through that level.
How far can this short-term upside momentum push price up? Just like the previous currency pairs, price can either be making a hook back to retest the top for more downside or it could be breaking out to the 61.8% Fibonacci retracement at 0.9920.
On the short-term time frames upside pressure seems to be prevalent, but for the long-term time frames I remain neutral for the moment. The AUDUSD could use the 0.9750 resistance and respect for the 50% Fibonacci retracement as a key level for a fall back towards the 0.80’s, but it could easily make a retracement to the 61.8% at 0.9920 as well.
How do you interpret these weekly candles? Let us know down below!
Thank for sharing this article and lots of success with trading this week! Make sure to check out our trading room as well.
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