Hello Forex Traders!
Last week’s economic calendar was as full as it can be with multiple central banks announcing the interest rate decisions for their currencies and the U.S. releasing their NFP & unemployment rates. Today we will analyze the aftermath and see what footprint the fundamentals have had on price.
Before we do that, I would like to remind you to read this article on the unemployment rate in the U.S. and another article on NFP trading.
The USD has indeed bounced off of the support levels mentioned in the previous article. From a technical analysis point of view, there were strong arguments on the charts to expect a bounce to the upside at that point in time. And the break of down trend channel and inverse head and shoulders chart pattern indeed materialized and the USD strength was especially visible against the Yen and Euro.
The upside break on the USD index has lead to an impulsive move but the momentum seems to have encountered heavy resistance at the 500 Fibonacci retracement confluence level. The USD could not break through the Fib level and posted engulfing weekly candles.
1) Is this a pause for more a continuation to the 618 Fibonacci retracement and later on to the 786?
2) Or is it in fact a bigger hook back to the bottom of the up trend channel?
Last week’s high and low are most likely key in answering that question.
The EURUSD has broken the 1.32 support level and can now be considered in a down trend on the 4 hour chart. From the daily perspective the currency could have space back to the bottom of the daily range and for now I am viewing any move up as a potential retracement back to the bottom of the range.
I am especially interested in downside upon a rally and a price action confirmation turn signal.
Last week the USDJPY was analyzed and a potential 5th wave and ABC correction seemed the most likely scenario for price development. That has indeed played out. The 5th wave push up was slow and tedious which has created divergence between wave 3 and wave 5. The subsequent retracement occurred in 3 waves and fell back to the 500 Fib.
The main question here is whether the currency will retrace deeper before continuing higher or was the 500 Fib the turning spot for more upside?
1) If the price breaks above the top at 100.20 then the currency pair is most likely resuming its weekly break of the triangle to the upside (funny enough, 100.20 was the target we mentioned in the trading room)
2) If the price respects the 886 Fibonacci level of the down side correction, a deeper correction back down to the 618 and/or 786 levels is possible
If the bullishness indeed materializes and gets confirmed by a break of the top or bounce off of the Fib, then I am very interested in the trading it the upside.
The GBPUSD remains „stubbornly“ strong and despite the major daily and weekly resistance so close by, has refused to break the up trend channel. As long as price stays in that trend channel (light green lines) the currency can keep pushing and pushing up with the trend. However, I am not interested in trading this at the moment. This is what I am looking for:
1) I myself am only interested in potential longs on dips after the Cable breaks the 1.57-1.5750 resistance zone up to the next Fib retracement at 1.60.
2) Or if the uptrend channel and major bottom at 1.5420 were to break, then trending the GBPUSD to the downside makes a lot of sense.
Till one of the two happens, I am in the waiting mode. And there is nothing wrong with that, in fact it can save a lot of pips.
Which currencies are you interested in trading this week? What do you think of the majors? Let us down below!
Thanks for reading and sharing!
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