Forex Weekly Watch: Sept. 21 – 25, 2015

EUR/JPY

EUR/JPY 1-Hour Forex Chart

EUR/JPY 1-Hour Forex Chart

EUR/JPY relaxed into a range pattern last week and it also created another double top pattern (this time at the major psychological level of 137.00) indicating to me that sellers are ready to sell into the rallies. This behavior has got me in in bear mode, and this week I’m looking for a test of the area between the top WATR and PWH to throw on some short positions. Aiming for the September lows under 133.00 makes the R:R look very enticing.

  • WO: 135.48
  • Top WATR: 136.93
  • Bottom WATR: 134.03
  • PWH: 137.44
  • PWL: 135.00

GBP/JPY

GBP/JPY 1-Hour Forex Chart

GBP/JPY 1-Hour Forex Chart

GBP/JPY also traded in a range pattern, nearly closing out last week where it began.  To me, this makes the Fibonacci retracement tool I used last week still valid as a draw for sellers, which makes it a great setup for the “risk-off” sentiment that gripped the U.S. session on Friday.

I’m looking to be conservative with this pair as well since we are kind of in unprecedented territory in terms of central bank actions, which means I’m not like to short again without a retest of the PWH, top WATR, and 61% Fibonacci retracement level drawn above. And once again like EUR/JPY above, the September lows around 180.50 makes for very enticing R:R ratio, especially if there is enough momentum to push the Japanese yen to new highs.  Also on a side note, there is a divergence between price action and the stochastic indicator showing that the market’s short-term rise may have run out of steam for now.

  • WO: 186.51
  • Top WATR: 188.62
  • Bottom WATR: 184.40
  • PWH: 188.29
  • PWL: 184.23

EUR/GBP

EUR/GBP 1-Hour Forex Chart

EUR/GBP 1-Hour Forex Chart

And the rangebound behavior never stops for EUR/GBP.  Let’s count four straight weeks of the market hanging out between .7250 – .7350, and I think it’s likely to continue without major events from the U.K. this week. There are European events on the forex calendar coming up, but they’re not likely to cause the type of shift needed for a major break of this strong consolidation pattern.  I’m more short biased because of the U.K.’s relative strength, but I will look to play the long side for small pips if the market does manage to actually get down to the bottom WATR area (also the major psychological handle of .7200).

  • WO: .7264
  • Top WATR: .7337
  • Bottom WATR: .7191
  • PWH: .7359
  • PWL: .7263

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