Forex Weekly Watch: Nov. 2 – 6, 2015

EUR/JPY

EUR/JPY 1-Hour Forex Chart

EUR/JPY 1-Hour Forex Chart

As I mentioned at the beginning of last week, it was safe to assume that bearish sentiment would continue in EUR/JPY because of the recent bearish catalyst on the euro from the ECB. It looks like that was the case as euro pairs continued to fall and EUR/JPY was able to break October and September lows. After breaking below 132.00, the pair bounce higher to retest 133.00 before the end of the week.

It looks like we’re still seeing a bounce at the start of this new week, which makes sense because the pair is looking a bit oversold on the higher time frames, but I’m keeping my bearish bias until the area between the top WATR/PWH and major psychological handle of 135.00 is test and broken. We’ve also got the 200 simple moving average and Fibs intersecting with that area to potentially draw in sellers.

  • WO: 132.93
  • Top WATR: 134.87
  • Bottom WATR: 132.22
  • PWH: 133.92
  • PWL: 131.61

GBP/JPY

GBP/JPY 1-Hour Forex Chart

GBP/JPY 1-Hour Forex Chart

GBP/JPY saw sellers early last week but quickly found buyers at the PWL/bottom WATR levels to continue the uptrending market its been in over the past 3 weeks. There’s no reason to be bearish on the pair at this time in my view, and with price action tightening up a bit, I’m looking for both a pullback to the bottom WATR/PWL and a break of the PWH for potential long orders. 188.00 looks to be the ATR top (and September high area), and with the right catalyst, 120.00 should be within reach given Guppy’s high weekly volatility range.

For the bears, the pair is starting to look overbought on the higher timeframes (there’s bearish divergence on the 4-hour chart between price and stochastic), so I may look for reversal candle patterns starting between 187.00 – 188.00 if risk sentiment starts to turn negative this week or to hop in if the trendline break lower looks legit.

  • WO: 186.15
  • Top WATR: 187.96
  • Bottom WATR: 184.35
  • PWH: 186.73
  • PWL: 183.91

EUR/GBP

EUR/GBP 1-Hour Forex Chart

EUR/GBP 1-Hour Forex Chart

The weakness in EUR/GBP continued last week after a small bounce to barely graze the .7250 (and not triggering my short EUR/GBP orders… hmmpph) before dropping on mainly bearish euro sentiment. The zig zag price action indicates there were sellers waiting to drop the pair on any small pullback, but as we can see in the one hour chart above that the moves got smaller and smaller, indicating that there are less and less players as the week went on.

I’m still bearish on the forex pair and I think we’ll see price action continue to tighten up and range, which is typical behavior at the beginning of a month. So, I’ll look towards the top WATR level/major psychological level (.7200) – .7250 for potential resistance, and if there is further downside move left in the pair, there’s no reason to think that we will see significant support until the major psychological level of .7000 is tested.

Of course, there risk to my downside bias in that if we see a trendline break, buyers could hop in to reverse sentiment.  Probably best to sit on this pair for now and see what happens.

  • WO: .7135
  • Top WATR: .7206
  • Bottom WATR: .7064
  • PWH: .7250
  • PWL: .7124

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