Forex Weekly Watch: Oct. 19 – 23, 2015

EUR/JPY

EUR/JPY 1-Hour Forex Chart

EUR/JPY 1-Hour Forex Chart

Not much action last week from EUR/JPY, at least until Thursday where an unexplained broad Japanese yen rally took yen pairs like EUR/JPY down lower.  This took the market to the bottom WATR and rising trendline that I highlighted last week, where buyers hopped back in and held the fort again the sellers.

This all means that the rally from the end of September is still intact, and any move to the 134.00 – 135.00 area is an opportunity to long as buyers continue to eye this area.  From the top, the top WATR and PWH is the area to watch, and if it breaks, there’s a good chance for buyers to turn that into a momentum play.

  • WO: 136.56
  • Top WATR: 136.82
  • Bottom WATR: 134.19
  • PWH: 136.94
  • PWL: 134.80

GBP/JPY

GBP/JPY 1-Hour Forex Chart

GBP/JPY 1-Hour Forex Chart

Guppy looked pretty similar to EUR/JPY last week except for the big drop happened at the beginning of the week.  This brought the market to my usual watch levels of bottom WATR/PWL, where buyers quickly jumped in and took the price right back up to the week open within a single session.  Overall, it was choppy and volatile week, and I expect the same with some top tier U.K. events to provide some catalysts to the British pound.

This week, I’ll be looking at that bottom WATR/PWL level once again as a buy opportunity, and from the topside, the major psychological level of 185.00 should start drawing in sell orders, all the way up to the top WATR level around 186.00. This pattern is forming a rising triangle pattern, which means breakout potential, but I think we’re a bit away from that point for now.

  • WO: 184.29
  • Top WATR: 186.22
  • Bottom WATR: 182.37
  • PWH: 184.73
  • PWL: 181.85

EUR/GBP

EUR/GBP 1-Hour Forex Chart

EUR/GBP 1-Hour Forex Chart

EUR/GBP was just as choppy as Guppy above, actually playing both WATR levels as reversal points to perfection (first testing and reversing the top WATR and the same for bottom WATR) as an example of reversion to the mean type behavior.

Will we get the same behavior this week? I think volatility will stay bid, but it’s tough to tell whether we’ll get choppiness or a breakout because of this week’s forex calendar lineup.  Both the eurozone and the U.K. have economic data and central bank events to watchout for. For now, I’m in “watch mode,” but as I’ve said since ‘Nam, I think the U.K. is the stronger of the two economies, and any rally in EUR/GBP is likely to draw in sellers to play the fundamentals. Every level from the top WATR to the PWH is in high alert for sellers to possibly jump in, especially the major psychological level of .7500.

  • WO: .7356
  • Top WATR: .7426
  • Bottom WATR: .7286
  • PWH: .7493
  • PWL: .7338

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