1. EURUSD suffered one if its biggest losses of the year last week. The pair ended Friday 200 pips below the week’s open and a massivse 440 pips below the weekly high.
The Trump-inspired surge followed by a sharp selloff led to a weekly candle that engulfed the last eight weeks of price action.
This drop combined with my bearish long-term outlook for the pair leaves me watching for selling opportunities going forward.
However, due to the velocity of the recent move, the Euro finds itself a bit overextended against the USD. As such, it may be prudent to wait for a pullback to the 1.0950 area before considering an entry.
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Key support comes in at the March 10th ECB low of 1.0820 followed by 1.0710.
2. GBPUSD showed resilience last week in the face of a strengthening US dollar. In fact, the British pound is the only major currency that appreciated against the greenback.
But given the 3,000 pip landslide since the June 24th Brexit, sellers were bound to get squeezed eventually.
My view for the pair hasn’t changed much from last week. A retest of the 1.2790 handle could present a compelling opportunity to get short.
With that said, I’m in no hurry to risk capital here. It’ll take a bearish pin bar on a retest of the 1.2790 area to pique my interest. Until that happens I’ll remain on the sideline.
3. AUDUSD: After months of consolidating and several weeks of false breaks, the AUDUSD (finally) broke down last week. The trend line support from the 2016 low came under fire on five separate occasions before eventually failing during Friday’s session.
What’s perhaps more impressive than the break below support is the weekly bearish engulfing pattern at a swing high. I pointed out on Friday how this combination hasn’t been kind to the pair since June of 2014.
From here traders can watch for a retest of the 0.7600 area as new resistance. While there are a few levels of support just below current prices, the next key area of value comes in at the September low of 0.7440 followed by 0.7330.
4. NZDUSD: The NZDUSD has been quite choppy for most of 2016, making it a difficult pair to trade. However, things are starting to come together that could make for one of the best opportunities of the year.
We have two major technical patterns in play. The first is the ascending channel that extends from the current 2016 low at 0.6346.
The second is a possible topping pattern in the form of a head and shoulders. I mentioned the possibility of this happening on November 2nd when the pair was trading near 0.7285.
Because of where neckline support lies, sellers will need to break.channel support first before we get a confirmed head and shoulders reversal.
As such, there are two ways to approach the NZDUSD going forward. The first is to trade a break of channel support while the second is to wait for a confirmed head and shoulders.
The one you choose will depend on your style of trading as well as your outlook for the pair.
5. AUDNZD: Given what we just saw on the NZDUSD, it’s probably no coincidence that the AUDNZD is carving out the opposite pattern.
After all, the two tend to move in opposite directions. mentioned the potential for an inverse head and shoulders last Tuesday ahead of the U.S. election and RBNZ rate statement. While the two events created a temporary setback for the bulls, the pair finished the day and eventually the week higher.
I should also point out that although a reversal looks promising, the pattern above is far from confirmed. A daily close above the 1.0765 handle is needed for that.
For those interested in a more immediate opportunity, the 4-hour chart is carving out a descending channel. The pair finished Friday’s session just below resistance and looked poised to make an early move this week.
A close above the 1.0600 area would expose the inverse head and shoulders neckline at 1.0765. A daily close above that would open the door for a move toward the measured objective at 1.1295.
Gold – Gold reverses lower after volatility picks up in wake of US election
The spot Gold market fell dramatically lower last week after briefly breaking above 1310.00 resistance and then reversing sharply into the week’s close. We could see more downside movement in the near-term and look to sell on a retrace whilst under 1300.00 area on a 1 hr, 4 hr or daily chart sell signal.
Crude – Crude Oil weakness continues
Crude Oil was selling off before the U.S. election and has continued to sell-off after it, indicating bears are decisively in control here. Price is now threatening to break below 43.00 key support level and if that happens we will likely see another leg to the downside. We can look to sell this market on any strength this week, ideally on a 1 hour, 4 hour or daily chart sell signal. Whilst under 47.70 we remain bearish on Crude Oil.
S&P500 – U.S. stocks remain buoyant following volatility after Trump win
Upon looking at the daily S&P500 chart below, we can see the big bullish reversal that took place last Wednesday after the U.S. election was settled. This huge bullish reversal indicates that smart money is pricing in a more optimistic future than what common investors and media outlets had predicted if Trump won.
The logical play would be to use weakness to buy in the coming days and we could see a huge upside follow-through into the end of the year. Look for buying opportunities in the S&P500 between 2106.00 and 2035.00, and whilst price is above that 2035.00 level the bull market remains intact.
GBPJPY – Sterling/yen surges higher on fresh buying
The GBPJPY broke significantly higher last week, closing above the key level at 129.00 and surging higher after a bullish pin bar on Wednesday.
Price has moved up above 129.00 key resistance and that level is now a key support level. We see potential for prices to continue higher in this market and can look for buying opportunities on any weakness in the coming days whilst price is above that 129.00 level.
Ideally, we would buy on a 1 hour, 4 hour or daily chart price action signal that forms following a retrace lower but whilst still above 129.00 key support.
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