Forex Weekly Watch: Sept. 1 – 5, 2014

EUR/JPY

EUR/JPY 1 Hour Forex Chart

EUR/JPY 1 Hour Forex Chart

I’ve got a chart above on EUR/JPY showing that since the end of July, it can’t seem to break out of a range.  With both Europe and Japan seeing weakening economic conditions, I guess forex traders can’t decide on which currency they want to short more: the euro or the yen!

Since we’ll get the latest monetary policy decisions from both the Bank of Japan and the European Central Bank this week, I think there’s a good chance that the choppiness will continue between 136.00 and 138.00.  My bias is to play the short side IF geopolitical tensions in Ukraine and the Middle East continues to be a broad market driver, but I also won’t rule out a break out play in either direction if we see a big surprise from either central bank.

  • WO: 136.76
  • Top WATR: 137.49
  • Bottom WATR: 136.04
  • PWH: 137.67
  • PWL: 136.04

GBP/JPY

GBP/JPY 1 Hour Forex Chart

GBP/JPY 1 Hour Forex Chart

It looks like the British Pound is coming out of its recent funk, while yen bears aren’t scared to hop into Guppy to play a host of weak economic data released last week from Japan. The pair has formed a short-term trend higher with a potential support area around the rising trendline, moving averages and bottom ATR level.  Pull backs aren’t always in the cards, so if it does break out and retests the PWH, I may consider taking a bite there for a long position.

  • WO: 172.86
  • Top WATR: 173.82
  • Bottom WATR: 171.90
  • PWH: 172.74
  • PWL: 171.67

EUR/GBP

EUR/GBP 1 Hour Forex Chart

EUR/GBP 1 Hour Forex Chart

EUR/GBP is also back in trending mode, but will it continue with monetary policy decisions from both the Bank of England and European Central Bank this week on the forex calendar? I believe the tendency is that we’ll see a bit of consolidation until the event, so I may have to sit back on this one.

I will take great interest in a potential short play though if the market does move higher to the top of its weekly volatility range, which happens to line up with the moving averages that are currently turning lower.  The bottom WATR level is actually a strong support level that held mid-July, which also happens to be the low area of the year for EUR/GBP.  With strong potential support like that, that makes shorting now a low R:R trade, which makes more sense to wait for a pullback before I can enter this market.

  • WO: .7913
  • Top WATR: .7951
  • Bottom WATR: .7875
  • PWH: .7980
  • PWL: .7913

Risk Disclosure
Q2 2014 Trading Performance Review
Read about my trading framework
Follow me on MeetPips.com
Follow me on Twitter
Like my Facebook page