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.
We have an overstreched move from friday, when EU was going up, while GU was going down, which rarely happens in such a way, so monday-tuesday, the move should correct. SL can be set near, above 8800, target between 8700-8740. The higher you set the SL, the bigger of a target you can have. 8700 would be my lowest target.
EU was bullish last week as expected and now we reached an interresting cross-road. The late friday move above 1.10 might have been a false break. So I would be careful with more longs until the 880-920 area is tested again. This area on EU is the 100 area on USDx at the same time, so it is very important. We should re-test this area next week, until then, its safer not to trade. From there there are 2 options, we bottom out between 880-920 and EU will continue above 1000, towards 1060, or we break it and EU will go down towards 790-810 and potentially lower. If we break lower, the first area to look for longs would be around 750 and if lower, then at the current double bottom, or lower, so low 600 numbers or even 450-500. Monday-tuesday will give us a clue as what to do. Maybe better to wait until thursday for some safe trades. Because this can break out either way for 300-400 pips, so not safe for scalpers who trade both directions.
Now, if my EU and UJ forecast works out, then EJ could be the trade of the week. Why? Because a combined strength of the EURO and weakness of the YEN, can create a very bullish scenario on EJ. It can possibly be even a turning point for EJ, for more bullish action in the coming weeks. SL below last week’s low, but since yen can be volatile, more than a few pips below would be recommended.
UJ is showing very strong bottoming above 107. We didn’t break 106.80 for over a month! So this might be a good time to go long. On the upside, we have a first strong barrier of 108, so the first spot to close longs could be 107.90-108.10, but if we break and stay above, the pair can easily continue towards 110 and higher. SL area is very clear to see and no brainer, at 106.80. If not breached, it is a clear signal for bulls!
We had a strong rejection from 727 this week on EU. A 100 pip rejection on the same day, to be exact. Even London and NY turned bullish below 800. Like I posted mid week, I saw it as a trap. Next week will confirm, if I was right or not. I am expecting some correction early next week. On friday, during NY session, 780-790 was a very strong support, so that would be the first area I would wait to come back to, next week. Second strong support area was in the 750 range, which might be re-visited, too, but I wouldn’t bet on it. A SL is easy, if 727 stays untouched next week, we will definitely see 880, at least, with my final target of 960. So a SL for the week might be safe below 690, because if we break below, it will most likely turn bearish and then we might see even the 500 area again. So, if you are long, watch the early week PA very carefully, we need a clear rejection below 800, to stay long for the whole week. Below are the ideas shown on a H1 and H4 chart.
My main pair for next week will be EURUSD again. Friday close was around 870. On monday/tuesday, I expect a push towards 910-915 minimum, that might be the first hurdle on the way up, but that is my first and easiest target. If broken and safely above, 950-960 would be the second target. I won’t trade after that most probably and just wait what happens next. I can see 1020-30 next week, too, but won’t trade towards it, 960 will be enough. For swing traders, who trade into 1050-80, a SL of 790 is good enough.
EURGBP is bottoming strongly in smaller time frames, so a spike up is very likely. With a SL below last week’s low, which was 8681, we should re-test 8770, at least. Up to 8830 maybe. With a SL just 10-20 pips below 8681 and a target of 80-120 pips, the profit/risk ratio is very good. So not a good week for hardcore bears, even though my medium term target is 8300-8400, but until the current low is broken, a spike up is more likely than further down at this point.
And lastly EURJPY. Since I am expecting a push up in euro and eurjpy is bottoming on both small and medium term time frames, a spike up towards 117.70-90, is very likely. SL is easy to set, below this month’s low, either 116.30 or a safer one at 115.90.