Forex Weekly Watch: Dec. 14 – 18, 2015

EUR/JPY

EUR/JPY 1-Hour Forex Chart

EUR/JPY 1-Hour Forex Chart

After consolidating a bit in the previous week, EUR/JPY took a turn back to the downside, mainly on the broad risk aversion sentiment that hit the broad global markets.   Zooming out a bit to look at the bigger picture, we can see that the consolidation area lied just under the 61% Fibonacci retracement area, which may be the reason why the pair stalled from a bit.  And with the market moving lower, we now see a consolidation-breakout setup to the downside, which tends to draw in more sellers.  If the slide lower continues, another test of the 130.00 area is not out of the question, making for an interesting reward-to-risk setup at these levels.

  • WO: 133.08
  • Top WATR: 134.25
  • Bottom WATR: 131.91
  • PWH: 134.22
  • PWL: 132.63

GBP/JPY

GBP/JPY 1-Hour Forex Chart

GBP/JPY 1-Hour Forex Chart

Guppy has been in choppy mode since the beginning of December, and tightening up around the 184.00 – 185.00 as it moves forward.  Also, zooming out on this chart a bit, we can see that this is creating a “trianglish” setup for a potential downside breakout of the PWL.  If broad risk sentiment stays in aversion mode, I’m all for a short of this pair if it does break lower, especially since we may not see support until the previously strong support area around 181.00 from September.

  • WO: 184.53
  • Top WATR: 186.10
  • Bottom WATR: 182.97
  • PWH: 186.35
  • PWL: 183.39

EUR/GBP

EUR/GBP 1-Hour Forex Chart

EUR/GBP 1-Hour Forex Chart

EUR/GBP was also choppy last week, but it looks like buyers are still in control of the pair as it holds above the .7200 handle.  Not a big fan of shorting the pound against the euro, but if global risk aversion sentiment remains, it only makes sense stay long in the short-term as the pound may continue to selloff.

A pullback to the previous week lower (PWL) is what I’m looking for to potentially go long, but forex traders may even take it all the way back to .7100 before dipping their toes back in the water for a long play.  Just above the PWH/top WATR is a sensible target after going in on a pullback as it may start to see resistance in that area because of the previous consolidation between .7250 – .7400 back in August and September.

With all that said, a downside move is still not out of the question for me because of monetary policy and economic reasons, which makes a break below the PWL/bottom WATR an area to watch as well.

  • WO: .7212
  • Top WATR: .7280
  • Bottom WATR: .7145
  • PWH: .7279
  • PWL: .7164

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