Forex Weekly Watch: Nov. 9 – 13, 2015

EUR/JPY

EUR/JPY 1-Hour Forex Chart

EUR/JPY 1-Hour Forex Chart

It looks like my bearish bias on EUR/JPY from last week’s Weekly Watch was on point, but it was in a low volatility market environment as forex traders focused on the Greenback last week. With price action tightening up a little bit, this changes my approach slightly.

I’m still biased to the downside, but I’m looking more for a downside breakout of a that triangle-ish pattern forming, rather than a pullback higher if there’s a major catalyst behind it. With the markets tight like this, if there is a move above the PWH and top WATR, that could draw in buyers. Of course, if it does hold (especially around the top WATR/previous support area), I’ll look to take on a small short position. The next area of support looks to be the 130.00 – 131.00 area, so the risk-to-reward proposition doesn’t look that great without a major bearish catalyst.

  • WO: 132.29
  • Top WATR: 133.54
  • Bottom WATR: 131.04
  • PWH: 133.21
  • PWL: 131.53

GBP/JPY

GBP/JPY 1-Hour Forex Chart

GBP/JPY 1-Hour Forex Chart

I was bullish on GBP/JPY last week because of the slow grind higher the pair has been on since the end of September, but the tide may have changed thanks to recent commentary from the Bank of England on the U.K.’s inflation outlook. That catalyst is likely puts short-to-medium term pressure on the British pound, so that’s what I’ll be looking for this week.

On the one hour forex chart above of Guppy, I drew a Fibonacci retracement tool to pinpoint potential resistance areas.  I think we’ll likely see the area between the 50% Fib (186.00) to the PWH/top WATR draw in sellers.  Also, a breakdown of the rising lows is something to watch out for potential short sellers.

  • WO: 185.57
  • Top WATR: 187.35
  • Bottom WATR: 183.80
  • PWH: 187.69
  • PWL: 184.31

EUR/GBP

EUR/GBP 1-Hour Forex Chart

EUR/GBP 1-Hour Forex Chart

Lots of action in EUR/GBP last week but the pair pretty much ended up near where it started the week around .7135. I’m still short biased on this pair as well, but as I mentioned in my GBP/JPY thoughts above, the pound could see pressure in the short-term.

I think a likely scenario for this pair is range bound behavior, with a likely shot of volatility this week with upcoming major events on the forex calendar from both the eurozone and the U.K.  That makes both the top and bottom WATR levels ones to watch for reversal plays back to the week open, especially if there is a pullback higher.  But if there is a breakout higher on the recent U.K. catalyst, look for the next resistance area to be around the last broken support/consolidation area around .7350.

  • WO: .7132
  • Top WATR: .7204
  • Bottom WATR: .7061
  • PWH: .7197
  • PWL: .7042

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