Capre’s Forex Analysis – Short Term Base in Place for EUR/USD
EUR/USD – Short term base in place
After now 5 failed attempts to close below the weekly Kumo and 5 rejections with the last one forming a higher low, there appears to be a short term base in on the pair at 1.3500. To note the pair has yet to on a weekly and daily basis close below 1.3500 so there is some traders willing to make a stand here.
With that said, we now have a clear line in the sand with buy orders possible at 1.3500 with stops below the lows and targets set to 1.3700. This also means any closes below the lows will likely start a new wave of selling for the pair but for now, short term gains may be had on a re-test of the big figure. Upside will have to contend with the falling Tenkan which should be its first test. The pair is inside the Kumo which is rather larger meaning we are in a directionless market until price emerges on another side. It should also be noted the pair posted its 1st weekly gain in over 10 weeks.
GBP/USD – Double Rejection off the Lows – Next Move is Tricky
This is one of the more interesting charts technically. The pair formed a serious rejection in the previous week which suggested there were some buyers in place supporting it as it was the fiercest rejection to date on the downside. This was followed up with a similar probe which produced a higher low suggesting the hype may be real. However to star this week the pair is pushing lower from the start so what we need is a third test to the downside which either a) make a higher low, or b) make the same low.
In either case, both are acceptable setups for buys to find their way back to 1.5200 and possibly to the fib projections between 1.5425 and 1.5475 so there are some strong upside targets in the waiting. Keep in mind beyond that there is a falling Kumo until the middle of April which should hamper upside gains.
AUD/USD – Trudging along, steady as she goes
Inside an apparent expanding triangle (one of the worst price action patterns out there) the pair is possibly headed for a trendline which is potentially the basis for the price pattern. Notice my three skeptical words in there (apparent, possibly, potentially). I use them because these patterns are not only horrible to trade, but also very dubious and we would need a 3rd touchdown on the upside trendline to verify it. If the line is for real, then around .9250/75 the pair could run into an upside test. It has been climbing 4 of the last 5 weeks which is a solid showing and out of all the majors, its holding up the best against the USD to start this week. Any dips should be contained by the Kijun/20ema levels around .8960 so there is a chance for a small buying opportunity with light positions. The harbinger in this one is its virtually in the middle of the range which is not super exciting. Other than that, the Kijun and Tenkan are flat so the pair is moreso coasting then boasting. Eventually we feel the pair will run into the Kumo which will carry the pair back up for a 2nd attack on the 09′ highs.
USD/CAD – New Sheriff in Town
Well, after three attempts and 6mos later, the pair finally broke the 1.0200 barrier and closed below it. We feel this is probably the real deal so we are now only looking at downside plays. The trick is where? We could get aggressive and sell around the mid 1.02’s which is the most aggressive option on the table. Another play is to wait for the 20ema to continue its song as its been holding the pair for some time. Thus, any retracements back to this level are likely good sell opportunities to take profit 1st at the 1.0200 level and then play for a larger move down while protecting stops at this point. The Kumo is massive and should hold any upside moves around the 1.0700 level and with the Kijun and Tenkan flat, the current overall drift is clearly to the downside so we will wait for our retracements and then look for shorts on the pair, perhaps even targeting the parity level by mid-April
EUR/JPY – Strong Base in at 120.00
Two rejections and two failed attempts to close below the 120 barrier have sent the pair back to the other big figure at 125.00 for a real upside test. What is interesting to note is the pair had a very large selling week at the end of February only to form a higher low back to back weeks and come back to where it started. Even though the downside action did in one week what took two weeks to the upside, the bottom line is this is a real challenge from the bulls. The trouble here is both where the weekly highs line up and the Tenkan which happens to come in at the same level. It is clear the 125 barrier is a hot button which should stir the order flow pot and really test the mettle of who is more serious. The good thing is if you want to sell, the line is clear and if you feel like you want to buy, 120 now offers a good base or you can wait for a break and close above 125 for a move up to the 20ema at 127.50.
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Chris Capre is the current Fund Manager for White Knight Investments (www.whiteknightfxi.com/index.html). He specializes in the technical aspects of trading particularly using Ichimoku, Momentum, Bollinger Band, Pivot and Price Action models to trade the markets. He is considered to be at the cutting edge of Technical Analysis and is well regarded for his Ichimoku Analysis, along with building trading systems and Risk Reduction in trading applications. For more information about his services or his company, visit www.2ndskies.com.