Forex Weekly Watch: Jan. 26 – 30, 2015

EUR/JPY

EUR/JPY 1 Hour Forex Chart

EUR/JPY 1 Hour Forex Chart

In last week’s “Weekly Watch,” I said that “there’s no reason to go bullish on EUR/JPY until we see a sustained break above the moving averages,” and “until then I’m looking to short on a retest of the MA’s.”  Well, I didn’t take that short on the retest, so I’m kicking myself now as the pair did retest the MA’s and dropped like a rock thanks to the ECB coming out with a bigger QE program than expected.

For this week, I still don’t see a reason to go short, and once again, I’ll probably try to hop in on a pullback; with such a big move last week, it wouldn’t be surprising to see profit taking.  Also, we’ve got a bullish divergence forming that could indicate a short-term bottom.  So, retest of the 134.00 is what I’m eyeing, which is a full WATR retracement and possibly another retest of the falling moving averages by the time it gets there, if it does.

  • WO: 131.19
  • Top WATR: 132.74
  • Bottom WATR: 129.64
  • PWH: 137.64
  • PWL: 130.93

GBP/JPY

GBP/JPY 1 Hour Forex Chart

GBP/JPY 1 Hour Forex Chart

Last week was a tricky one thanks to the packed forex calendar, and ultimately, Guppy was one of many yen pairs dragged down by the EUR/JPY drop on the big ECB event.

On the technical side, this pair is in bear mode, and I think it’ll remain there until we see a solid break above the top WATR level/major psychological level of 178.00, with 180.00 as the next resistance area to watch.  And I wouldn’t be a big bear just yet until 176.00 breaks (where I’ll have to close my GBP/JPY long position early) and that bullish divergence signal gets invalidated.

  • WO: 176.34
  • Top WATR: 178.10
  • Bottom WATR: 174.58
  • PWH: 180.28
  • PWL: 176.17

EUR/GBP

EUR/GBP 1 Hour Forex Chart

EUR/GBP 1 Hour Forex Chart

EUR/GBP is also showing a bullish divergence setup, which just may play out after a huge drop last week.  Over the past month, this pair has dropped around 600 pips, huge for this slow mover, so if it does pullback higher, I’m thinking that .7500 – .7600 is not out of the question for a retest and hold as potential resistance. By then, we should see the moving averages in that area, which makes for another argument of potential resistance in the longer-term downtrend.  Of course, a break of the previous week low may signal momentum buyers to jump in this sinking ship!

  • WO: .7442
  • Top WATR: .7504
  • Bottom WATR: .7380
  • PWH: .7713
  • PWL: .7429

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