Recapping the Majors
EUR/USD– The Euro didn’t have enough juice in it to rally to 3400 again and fell towards the 3300 area. Although the Euro slumped against the Dollar, the move wasn’t huge. The Euro seems to be stalling around the 3300-3350 area which indicates that the market is waiting for something to push it in one direction.
Result: The Euro slumped lower versus the Dollar but is still moving in a range.
GBP/USD– The Sterling fell for the 2nd straight day against the Dollar but once again was unable to break the 9600 level. Yesterday the pair went as low as 9618 and today the pair moved slightly lower to 9597 before bouncing back up above 9600. With a volatile pair like the Cable, we have been seeing very little movement which could indicate a bigger move to come in the near future.
Result: The Dollar once again pushed the Sterling slightly lower but faced resistance at the 9600 level.
USD/CHF– After falling to 2100 the Dollar bounced back up and and rallied to slightly over 2150. The pair has been moving between 2100-2200 for the past 7 days and hasn’t chosen a firm direction.
Result: The Dollar rallied slightly higher versus the Swissy but is stuck in a range between 2100-2200.
USD/JPY– The Yen strengthened hard and pushed the Dollar down to as low as 116.37 before the Dollar could stabilize itself. The pair is now just under 117.00 at 116.82. The pair had been consolidating for the past 3 days which was a good indicator of today’s breakout.
Result: The Yen fought hard and pushed the Dollar way down to the ground!
Chart Analysis: What’s going to happen next?
I said yesterday to watch for the Euro to fall to 3300 in the near future and so far the price is moving towards that direction. We still have that bearish hidden divergence on the 4hr chart and stochastics are trending down nicely. Daily stochastics have converged together but for the most part still seem to be trending down which further adds to my bearish bias. I definitely think that we will see the pair continue to go to 3300 and if there is a clean break, then I would expect the pair to move to its 100 SMA on the 4hr chart at around 3250.
The Cable has been relatively quiet the past 2 days and I don’t think it will stay that way for too much longer. 4hr stochastics are trending down and are almost in oversold territory while daily stochastics are still in overbought territory. The pair is trading right above its 50 EMA on the 4hr chart which also happens to be at around 9600. If the pair can break this, then 9500 looks like a very good target because the 200 SMA is there on the 4hr chart and both the 50 EMA and 100 SMA are there on the daily chart. 9500 looks like a verrry good support target if the pair breaks below 9600.
The Swissy has been bouncing between 2100 and 2200 for the past 7 days and if this pattern is going to continue then I would expect it to move to 2200 tomorrow. Both 4hr and daily stochastics are trending up which supports my bullish bias. The only problem is that the pair could face slight resistance at its 100 SMA on the 4hr chart which is right around 2175. Overall, I think the pair will get to 2200 tomorrow as both stochastics are trending up very nicely.
For the past 2 days I’ve been ranting about the consolidation the pair was doing. We saw a classic ascending triangle which is a very good indication that an explosive breakout is about to happen. Today, that "explosion" happened as the pair sliced through its 200 SMA and shot down to as low as 116.50. Daily stochastics are trending down which could indicate future bearish movements in the medium term, but because of the strong move today, the 4hr stochastics have reached oversold territory and we could see a slight retracement tomorrow. The pair may head back to its 100 SMA on the 4hr chart and then proceed to move down and continue its run.
I still haven’t seen any real good specific entries to give out. That doesn’t mean there are no trades out there. I’ve given my general thoughts to the direction of the pairs and through this blog I hope you can benefit and come up with specific trades based on my comments. However, if I do see a really good trade I will definitely share it with you all. Happy trading!