July 16th, 2011 – FX Weekly Analysis

Commentary for this week’s price action:

  • Based on last week’s daily/H4 immediate outlook, 3/4 forecasts were right for the first part of the week. GBP/USD, EUR/USD and EUR/GBP all dropped before finding some support midweek with random ratings and annoucements which helped bull traders out. EUR/JPY was another mistake of my ignorance. Gotta stop going against the other pairs and thinking that these operate independently. If the other 2 EURs were going to drop, why wouldn’t this one?
  • AUD/USD followed the other 2 pairs traded against the USD and dropped as well, before bouncing back towards the 1.08 level for a rejection again (i played this level for binaries).
  • USD/CAD another surprising pair, went as high as 0.977 before dropping down, currently lower than last week’s close.
  • GBP/USD and EUR/USD have both broken the downtrend line formed from last week and the current uptrend line for this week’s action. Both also broke weekly support in the 1st part of the week before bouncing back up as some would call it a “bull trap”, which I find to be bullshit. Oversold = bounce, likewise with overbought levels.
  • EUR/JPY and EUR/GBP both hugging previous downtrend lines from previous runs down. I just extended old lines to show these.

Technical Forecasts: [Brackets = this week’s forecast]

  • USD/CAD [Long]: Broke and closed below daily support on H1, H4 and Daily. We 100 pips away from monthly support levels and also the all time closing lows within the past 5 yrs (on monthly). Monthly candle is still developing, I’d imagine it closing right on support within the next 2 weeks. Then next month see it bounce up, unless the US economy is that fucked up, we shouldn’t be able to break and close below the monthly support. Weekly could retrace a green candle this week before dropping to go with the previous trend of green, red, green red. It’s not too often that we have consistent candles. I see a small retrace this week to repeat that historical pattern, before dropping down to the monthly support. Needless to say, a rough area to be trading this pair right now given the other pairs being in a struggle as well.
  • AUD/USD [Short/Unsure]: Leaning towards a short, we could very well be stuck within the current channel sideways. But, after 3 rejections of the 1.08 level, I like this going back down to the lower channel below, but also coming down to daily and weekly trendline support. Monthly trendline is near the weekly as well, if USD is capable to strengthen these coming weeks, coinciding with the USD/CAD bounce. I still like AUD/USD going short in the long term, that wedge on the weekly is bound to break sooner or later to the down side. Drifting towards par or even lower.
  • GBP/USD [Short]: Daily downtrend line and resistance channel coming up depending on the PA. Although weekly TL support held nicely this week, we could see a continuation bounce up to the daily TL, then back down to see if weekly support holds again, if not, we break that and drop down following the monthly descending triangle formation.
  • EUR/USD [Short]: Not sure about this term, but I think it’s called a bearish divergence. EUR/USD uses the weekly support and H4 downtrend to use as the divergence lines, I still like this bouncing down in the long run for the rest of this year, although that’s a very long outlook, I could be very long. But business cycles are something that will always happen. Choppy areas ahead, given the divergence, we could very well go back up to hug the weekly TL before bouncing back down to meet that downtrend line on H4.
  • EUR/GBP [Short]: This trades closely to the other pairs of EUR in terms of dropping, but doesn’t bounce like EUR/USD since USD is a funny pair to trade against. EUR/GBP and EUR/JPY share directionality, so this is a correlation play. Depending on how fast we drop though, we have weekly and monthly TL’s coming up for a bounce in the near term of 0.5-2 weeks away.
  • EUR/JPY [Short]: Similar to EUR/USD, this has a bearish divergence using the H4′s 2 previous downtrend lines. Just the start of the divergence, but assuming the TLs hold, we’re in for a drop. If I’m counting my pips right, we have weekly support coming up in about 500 pips, so we do have quite some room to move.

Conclusion:

This week unlike the past few weeks, is correlation galore, assuming I get it right anyways. So I’ll be either completely right or completely wrong this time, no more iffy results. But I can’t predict a bounce mid week again like previous weeks.

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