A little bit of deja vu this week as we’ll be revisiting GBP/AUD & AUD/CHF, plus a fresh look at the downtrend in CAD/JPY
According to this week’s forex calendar, both the Aussie and Sterling are likely to make moves on economic catalysts. This makes the major area of interest between 1.8100 to 1.8200 one of the top areas to watch this week, basically on the hunt for a breakout from the short-term consolidation pattern currently forming.
The pair seems to have already formed support and moved higher, but if the fundamental catalysts do give us a confirmed upside breakout this week, look for a move higher to the next potential resistance area around 1.8500 – 1.8550. This also happens to be around one weekly ATR from the current levels, so it’s a move that could easily be made within the week if the fundamental drivers are strong enough.
We also checked out AUD/CHF as it was grinding lower longer-term, and at the time seems to have slowed to a halt between 0.6900 – 0.7000. Last week it spent most of its time in that area, but it looks like we’re finally seeing a breakdown of the 1.6900 handle.
And if this week’s Aussie data or global risk sentiment shifts negative, traders could turn this slow break into a momentum move lower. But don’t be totally blind to a potential long play as a break of the falling highs pattern could easily bring in profit takers for a quick upside move back up to the major psychological area of 0.7000
Last but not least, CAD/JPY could be on the verge of reversing back lower into the downtrend. We just saw a quick run higher from 80.00 to 82.00 in a very short timeframe, running into what could be a major resistance area in the short-term.
ot only is the pair testing the falling ‘highs’ pattern, but 82.00 was a support area that was broken and already drew in sellers at the last retest back in mid-May. It looks like the pair has already run out of steam according to the overbought signal from the stochastic indicator, and we’re starting to see resistance candlestick pattern that may preempt a return to the downtrend that goes back to mid-April.