Hello Forex traders,
Welcome back to a new week of Forex trading. Before anybody starts with trading, make sure to check out a couple of great articles that were posted on the WET website.
A) Did you ever wonder about the battle between man and machine in Forex trading? Check out this article.
B) Curios which indicators are the absolute best of the best? Check that out here.
C) Interested in price action patterns that can help your trading immediately? Get more info here.
Before diving into the most recent price action, let us start with a quick review of the current weekly situation. Basically USDJPY broke out of the triangle (purple) after a strong impulse up. The breakout stopped at the monthly resistance line (magenta) which caused the currency to retrace. So far this retracement has stopped at the 50% Fibonacci retracement (blue), after which a weekly pinbar and a weekly inside candle followed.
LAST WEEK BULLS
Last week’s weekly candle posted bullish engulfing twins, which confirms that bulls controlled the last couple of weeks. However little follow through has been witnessed so far.
When can that change?
Price would need to break above these weekly highs (dark red line) for a first break out trade (dark green arrow), but the bigger breakout (green arrows) can only occur above the resistance line (magenta).
If the currency does break, then the major targets of the breakout are the Fibonacci targets of -27.2% at 107.80 and the -61.8% and -27.2% Fib target confluence at 110.80-111. Price should stay above 99 (green line) otherwise the bullish breakout scenario becomes unlikely.
4 HR ASCENDING WEDGE
On the 4 hour chart an ascending wedge is being built, although a break above the resistances (red) is needed before the pattern is confirmed. On this 4 hour chart the biggest wide open space (WOS) is visible between the -27.2% and the -100.0% targets (dark green circles). The other areas could see potential breaks and bounces too (green & red circles / arrows).
Will the Aussie weakness be able to continue? Here are the key points when analyzing the AUDUSD for instance:
a) a break above resistance (purple) could have a potential to move up to the 50% Fib;
b) a break below support (magenta) could mean a move down to the next supports (orange/green) and later on to target.
The USDCAD has most recently accelerated with a big momentum (dark green arrow). The subsequent pullback retraced (blue channel) to the 50% Fibonacci level before a big bounce occurred.
There are 2 main scenarios in my opinion:
1) break of the top and continue up towards Fibonacci targets
2) a deep pullback towards support and a potential triangle
For the moment the CAD looks weak, but be cautious with the timing.
What are you looking to trade? Are the Yen, Aud or Cad on your list? Let us know down below!
For more detailed view on the AUDUSD, make sure to check out this weekly Forex recap.
Last but not least, if you have doubts when to establish an entry or trigger, take a look at this link.
Thanks for sharing this article and Good Trading!
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