The amount of confident bears in the retail market makes me a little nervous. There is still a possibility of last week’s second entry zone, which would hit current bears very hard and then the downmove could resume. Something to think about…

Here is the chart posted last week. Still valid.

I will keep it simple for next week. If you read the analysis I made last week, everything worked out as planned and next week should be simply a continuation, with the same targets. All we need to look for are new entries. I think the pictures below are pretty self-explanatory. All we need to consider for the moves to work out is where to put the SL. For EU, it would be above 1260, ideally above 1300. For GU its tougher, because it tends to do bigger moves than the euro, so just to be sure, above 2550 would be a good spot. And when it comes to UJ, the old SL below 105.90 is still valid, I would watch the monday price action very closely, for potential false breaks down for good buy opportunities. The area of 106.50-80 is a good long area, even if it broke to the downside real quick. The targets are safe, all the work will be with finding the perfect entry,

This week worked out as planned, but friday, by the end of the day, might have give a clue for next week. I am still bearish on EU and GU, BUT there might be some upmoves next week, to get rid of some retail shorts. We had a strong “London fix” today, with a probably false break below afterwards. I was watching retail last week…and most were long and buying every dip, which I didn’t understand, but well…then later thursday, we finally broke down, after all week topping out. Retail was still long biased and buying the drop…then we had a late friday drop and it was obvious retail switched to shorts heavily and is still short. But the market is not a free candy store…if something looks too good to be true, it mostly isn’t. 😉 If retail keeps selling this next week, I rather won’t. Not right away, at least. From watching and analyzing the EU chart on one minute scale, alongside the news that were being posted, I felt like 1215-18 was a trap to trap as many shorts as possible. I may be wrong on this one…but I think we will resume this bear move when most of retail is out of their trades, either margin called or long biased again. There is no point to short 1250 on EU and 2540 on GU, which were the closing prices today. We will likely go higher first. If I am wrong, no gain, if I am right, no loss, so either way better to stay out first. I am not recommending to go long, though! I would start looking for shorts on EU above 1300 again and for GU above 2650-2700. Ideally we will go even higher, or possibly re-test or break 1420 to get rid of current shorts. That would be an ideal short next week. So my advice is, stay out, watch the charts and wait for an opportunity. Long term nothing has changed, targets are still bearish, but short term, no need to be in a big drawdown until it happens.

And EG still “hates” to stay above 9000 or close to it, so still an easy short from that area. Long term target is still 8400, but the tight range might be here for a while.

Since last week didn’t work out as planned and we shot above the resistance line without any stops or retraces, shorts will be an easier trade next week. But I am working with 2 possible scenarios. The images below explain them better than words. We’ll either re-visit the important resistance zones from friday, 1320 and 1340, and start the short move on monday or we’ll break above 1380 and keep going up or topping until wednesday’s FED meeting. The first scenario should generate a retrace back towards a strong demand zone of 1200 and from then on we will see what happens. The second scenario, there is a large demand around the 1500 area, which could lead to a bigger drop, towards 1000-1060 minimum, during the next few weeks.

EU overshoot my targets last week too easily. I had a first target of 950 and second of 1000, where I expected a turn towards 820 again. But as I posted earlier on twitter, to me, that thursday NY spike was a trap. I expect that one to be “fixed” early next week. So my first target on the hourly chart is the 990-1010 area.

Checking the sentiment of the market and many analysts, people are waiting for that area to hit to go long from there. I am not going to do that. If we go towards 1000, I won’t long, even if I may miss a trade there. I expect the level to break, after sucking in some retail bulls. I expect 950 minimum, possibly lower, towards 820. Because if you look at the small picture, smaller timeframes, it looks very bullish…but if you look at the bigger picture and the daily chart, this can easily go down to re-test 630 and what if it breaks lower? I wouldn’t want to be long from the 1000 area and then watch euro drop towards a new low. So I will be very cautious with longs next week, probably just scalp them on the way. If we keep dropping until thursday, I will long scalp the drop for a quick ECB spike up and then see what happens, if we continue upwards after it or go back down for more lows.

When it comes to GU, the plan from last week is still on. Target 1 was hit very fast, on monday already and target 2, which was 2350, could be hit next week. Since EURGBP is turning, I will be turning more towards a stronger pound over the euro, so I am looking to sell EU next week, once we reach the 1000 area again. If EG keeps dropping, as expected, GU may go up, even if EU goes sideways or drops a little. So its not a good idea to look for correlation between EU and GU next week and long or short both at the same time. They may go different directions many times of the week, so be careful.

The plan, when it comes to EU, is to buy towards 950 and then look for shorting opportunities close to or above 1000. I have 3 targets, 950, 990 and 820, not necessarily for next week, so we need to wait for the week to unfold to see which direction we’ll go towards first. I expect a bull first, early in the week.

I have a medium to long term target on EG below 8500, so I will choose my EU and GU trades accordingly to that. That is, of course, if 9000 on EG stays safe and untouched. This week, we had 2 attempts to break it and market couldn’t even touch it, turned both times at 8999, which is a strong sell signal.

GU did one of its overstreched moves on friday, which many times is a signal of a trend change, at least short to medium term. First, all bulls are scared off, SLs hit and then the banks start buying. Same goes with selling after a big overstreched bullish move. Friday’s move looks like a typical bear trap to me, so its time to start building long positions. SL below 2000, which is a huge support area. First target area is above 2200, which should be easily achievable early in the week, second target would be around 2350 and the final target at 2500. Not sure if all targets will be hit next week, as its 400 pips, but it should be a good week to buy the dips.

A very bearish week behind us, with some bullish potential for the next one. First, we re-tested the 100 USDx area again, many times…all thursday and friday. Chart below explains it the best. The question is, if this was a lost FIGHT for dollar bulls, or a lost WAR. If it was the war…dollar has a lot of room to drop. Hundreds of pips…we will find out next week.

This reflects directly into EU, once we turned bullish on thursday, we had some good support re-tests on friday. Tokyo only made it to 822, well, not even Tokyo, it was New Zealand who did the re-test, Tokyo didn’t even go below 830 initially. Then London did another attempt of a drop and could only manage to go towards 816 and finally, both London and NY combined did manage 814. All these previous numbers caused bullish spikes, the stronger the session, the higher the spike. London fix was the biggest, of course. What does this tell us? It could mean that EU is preparing for a big bullish move! BUT, there is still a possibility to go lower, so we need to watch the current support zones early next week. Maybe we won’t even re-test the ones from friday, maybe we will re-test even the weekly support at 765 and then drop below. But the higher we stay stuck, the bigger the probability of a big bullish move. The key is that dollar index won’t manage to stay above 100 and EU below 800, because if they do, more downward pressure is coming. If they don’t, EU bulls will slaughter bears next week!

Looking at the daily chart, the bottoming on this pair might be over and a spike up in the cards any day now. Good thing is, stop loss area is crystal clear, simply below the current daily candles and the target can be easily 200+ pips, so a good risk to profit ratio as well. Unless we take out 8680 on the way down, EG should go towards 8800-9000. So its worth to watch this pair early in the week and looking for long opportunities above 8700 with a tight SL below 8680 and a target of 8800+, up to 9000. If aiming for 9000, a SL below 8650 would be a safer bet, though.

I am still having bullish bias from last week. SL is different now, a good one below 106.30, a safe one below 105.90. Target is still 107.90 and higher. With negative interrest rates, even asset managers won’t be able to hold onto JPY longs for much longer…and dealers are already short. BoJ wants a weaker YEN, so slowly both fundamentals and technicals are lining up to make USDJPY shoot up. And with a positive swap on longs, its safer to hold long and wait.