Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.
Click here to get access to the same charts I use.
Despite being relatively choppy since June, the one thing I can say in favor of EURUSD
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is how the pair is respecting key levels. For instance, last week found our target at 1.1300 before bouncing back to the 1.1430 resistance level.
As you can see, sellers also rejected the euro’s advance to keep the single currency below 1.1430 to start the new week. All in all, the pair has been the technical trader’s dream.
However, I am a little suspicious of Friday’s selloff, mostly because of how bullish the pair was on Thursday. While I do think we could see some selling pressure again this week, I’m not overly confident about taking a bearish position here.
In my opinion, the 1.1300 handle is the one that needs to fall in order for sellers to push prices significantly lower. Until that time, the euro will remain range-bound between 1.1300 and 1.1800.
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All that said, there’s no denying the euro’s bearish posture since breaking down in April. So despite my tentativeness to sell the pair at the moment, I do still favor sellers over buyers.
A daily close (using a New York close chart) below 1.1300 would pave the way to the next key support at 1.1130. Alternatively, a daily close above 1.1430 this week would turn our attention to the 1.1530 resistance level.
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GBPUSD bulls had a big day on Thursday. Following a close below the 1.2800 key level, buyers managed to close the pair above 1.2930/40 on the back of a 240-pip surge.
Last week’s buying pressure puts the pound back above the 1.2930/40 area I mentioned last weekend. However, keep in mind that this support area could extend as high as 1.2955 per the gap in early September.
The counter argument to last Thursday’s advance is, of course, the fact that GBPUSD has been trending lower since April. And not by a small amount either. Between April and August, the market lost more than 1,700 pips.
In light of Thursday’s bounce, the big question is, has GBPUSD turned the corner?
In my opinion, it’s far too early to say one way or the other with any degree of certainty. Yes, the pair carved an impressive rally on Thursday, but the market still looks relatively bearish when you factor in the price action since April.
From where I’m sitting, it’s going to take a close above the recent highs at 1.3260 to start to reverse the 2018 downtrend. Until then, any buying is hugely speculative and ultimately too risky for my liking.
For now, the 1.2930/40 support area must hold on a daily closing basis for buyers to have a chance of continuing where they left off last week. Key resistance for the week ahead comes in at 1.3070 with a close above that exposing the two recent swing highs near 1.3260.
Alternatively, a daily close below 1.2930 would cancel out Thursday’s advance and re-expose 1.2800.
AUDUSD bulls cleared a significant level last week. I mentioned the year-to-date trend line back on September 21st. Shortly after I released that post, buyers took prices above the trend line on the 26th but failed to close the day above it.
Fast forward to today, and you can see how AUDUSD finally managed to clear the level last Thursday. That could signal at least a temporary change in trend for the Australian dollar.
However, Friday’s long upper wick does hint at a pullback early this week. I would suspect that any retracement into the 0.7150 support area will attract an influx of buying pressure.
As long as that 0.7150 region holds as support on a daily closing basis, I like AUDUSD higher.
Key resistance for the week ahead comes in at 0.7300. It’s going to take a daily close (using a New York close chart) above that to expose the next key resistance level at 0.7460.
Alternatively, a daily close back below the 0.7150 area would negate the bullish outlook and re-expose the year-to-date lows near 0.7040.
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Similar to its AUDUSD counterpart, NZDUSD also broke free from a long-standing descending level last week. In this case, it’s a descending channel that extends from the June highs. You may remember this pattern from my October 16th commentary.
You can see how Thursday’s session closed well above former channel resistance. Buyers also took out the 0.6600 horizontal level which could serve as new support this week.
As always, it’ll depend on what kind of price action develops following a retest of 0.6600, if any. But as of now, NZDUSD appears to be on the move toward the next key resistance at 0.6715 with a daily close above that exposing 0.6850.
However, just like the AUDUSD commentary above, the NZDUSD remains in a downtrend that began in April. Until the pair starts taking out some of the recent swing highs from August and September, any buying here is a bit risky.
That doesn’t mean you shouldn’t buy last week’s breakout, but it does suggest that bets should be kept to a minimum until NZDUSD bulls prove themselves. At least that’s how I would approach this market.
I mentioned EURJPY on Friday. At the time, the pair was under pressure after retesting the 129.20/30 area as new resistance, a region I pointed out several times in October.
Despite the early selling pressure on Friday, EURJPY bulls regained some ground in the last few hours of trade. The buying pressure canceled out the bearish rejection candle that was forming at the time of my Friday commentary.
However, that doesn’t mean buyers are out of the woods just yet. Until they secure a daily close (New York 5 pm EST) above 129.30, there’s a chance we could still see a selling opportunity materialize this week.
But because of the mixed signals across the yen pairs and the late-Friday bid here, I don’t believe EURJPY is a sell, at least not yet. I’d prefer to see bearish price action such as a pin bar develop below 129.20/30 this week in order to confirm a short setup.
If sellers can get the job done, we could see EURJPY trend back to the 127.00 area. A daily close below that would expose the multi-month range floor at 125.00.
Alternatively, a daily close above 129.30 would re-expose the 130.90 resistance level. It would also negate any bearish trade idea for the time being.
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Leave a Comment:
35 comments
Nice piece success coach.
Thanks, glad you enjoyed it.
Many Thanks Maestro you nailed it/them
You’re welcome. Have a great week!
Thanks Justin for the analysis. I am already tempted to place a sell order on AUD and NZD cross because of the pin bars that have formed last week but I can see that the EMA’s are way too far behind which makes me think that it’s not a good set up at all. Is it worth to wait for an A+ signal and for the EMA’s to come close?
It’s always best to wait for an “A+” setup in my opinion.
What is an A+ setup?
It’s a setup that meets all your criteria.
do you think 0.7150 support then push up
We’ll see what the market wants to do.
I mean retrace to the support then go up
Hello Coach, are you looking at the bullish pin bar that formed on weekly chart at 1.13000 support?
If you’re referring to EURUSD, that isn’t a pin bar.
Thanks J, thought as much….But Gold has a weekly pin bar at 1215.00 support. I’m new and according to your lessons it’s good to trade one of them… So, far it has been paying off for me but most times they can be confusing like that on EURUSD weekly.
You’re welcome. That pin bar you’re referring to on gold is not something I would trade.
Thanks J….if i may ask what would be your reason of not trading it?
I don’t like the way the franc moves most of the time.
Very explicit…. and concise.
Hi Justin,
This is a nice analysis. If I may ask why don’t you use USDIndex charts in analysing EURUSD and GBPUSD further?
I thought USDIndex also determines the directions of the USD pairs.
Because I don’t need to use it, and I like to keep things simple. 🙂
Hi Justin
thanks for your analysis , trading becomes effortless when you master the key levels as you mentioned in one of your webinars
You’re welcome. Very true!
Hi Justin
thanks for your analysis.
The DXY monthly is in a clear uptrend….possibly approaching the 99.15 handle…this will definitely have a significant effect on all its pairs
Any comments on USDCHF pair? It s hovering at the highest level for the last several weeks.
I don’t trade the franc.
Justin I want to join your mentorship and training how could I make payment
You can go here:
Thanks Justin for your analysis. I’ve been waiting to enter EUR/USD but I’m waiting for bullish or bearish pin bar along a major reversal area but i have yet to see anything. So far the pin bars have been deceiving on EUR/USD.
I concur! Excellent analysis. Thank you for your thoughts!
Cheers. You’re very welcome. Always happy to help.
Would be great if we (me and my friend) can have a mentor like you, can you please share if we can pay fee then you become our mentor/coach
Hi Nkosekhaya, sure, you can use the link below to join the member’s area.
See you on the inside!
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Wednesday, 10 October 2018