Forex Weekly Watch: Aug. 11 – 15, 2014

EUR/JPY

EUR/JPY 1 Hour Forex Chart

EUR/JPY 1 Hour Forex Chart

We saw a big move to the downside in EUR/JPY last week, coupled with a bounce off of the 136.00 handle, created a new technical setup that looks mighty interesting.  Using the Fibonacci tool on the one hour chart above, we can see that the pair is testing the 50% – 61% retracement levels.  The Fibs also happen to line up with the 100 and 200 moving averages, which may serve as dynamic resistance levels for now.  Also given the risk aversion sentiment we’ve seen lately, I’m watching for a fresh move lower for a confirmation of seller strength before hopping in on this one for a short play.

  • WO: 137.02
  • Top WATR: 137.80
  • Bottom WATR: 136.24
  • PWH: 137.91
  • PWL: 135.72

GBP/JPY

GBP/JPY 1 Hour Forex Chart

GBP/JPY 1 Hour Forex Chart

Much like its cousin above, Guppy also saw a broad move lower last week, not only on risk aversion sentiment supporting the Japanese Yen, but also a big reduction of Sterling short positions after recent weak U.K. data/sentiment. For now, I’m staying safe by looking for a retracement up to the top WATR level/moving averages before considering a short play on GBP/JPY.  170.00 seems like the next major support level, making for a very attractive trade on risk-to-reward ratio alone.

  • WO: 171.46
  • Top WATR: 172.49
  • Bottom WATR: 170.43
  • PWH: 173.51
  • PWL: 170.70

EUR/GBP

EUR/GBP 1 Hour Forex Chart

EUR/GBP 1 Hour Forex Chart

Looking at EUR/GBP and the chart above, we can see that Sterling isn’t having the best of luck over the last few weeks.  Stochastics are pulling out of overbought conditions, signaling that the upside move may be out of steam, which is good for Pound bears who may have missed the last couple of pops higher.  For me, I’m still sorta biased in the British Pound, so if there is an upside move, I’ll most likely be watching the area between the major psychological level (.8000) and the top WATR level for some candle reversal signals.  But I’ll keep an open mind for both directions.

  • WO: .7991
  • Top WATR: .8030
  • Bottom WATR: .7953
  • PWH: .7998
  • PWL: .7915

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