Hello Forex Traders!
The FOMC had a massive impact on all the markets last week. It is time to evaluate all the factors and make some conclusions! First of all, read more on the FOMC here:
The Euro soared against the USD on Wednesday but has yet to see continuation of that bullishness impulse. The chances are high that it will happen soon – tomorrow would be a logical day. However, if it takes too long for the bulls to regain control and push the EURUSD higher, then the chances for a reversal are always luring in the background (a failure to break by this week).
The EURUSD weekly candle towers above the resistance trend lines (purple) and the weekly fractal with a lot of stamina. The close is very near the high which indicates no selling pressure at the end of last week. The bullish weekly candle is an imminent sign that the EURUSD is breaking out of its year long range to the upside. A short term trade up to the next resistance seems like a great trade setup (see 4 hour chart).
One word of caution though: the 1.36 even number, the 1.3640 Fibonacci target, the 1.37 top and yearly high are strong resistance levels. A move up to these afore mentioned resistance zone of 1.36-1.37 seems very likely, but a push through it is far from guaranteed. A corrective reaction after that indicates high likelihood of more continuation above the 1.37. A break above would mean that the EURUSD has enough power to seam ahead up towards 1.3850, 1.400, and 1.4150 resistance levels.
The Cable is in a different spot. FOMC created the same short-term bullish momentum, but the GBPUSD’s up move was rejected by the massive resistance level at 1.6160. This was a major level because:
1) It was this year’s 2013 high
2) An 886 Fibonacci retracement level
3) Weekly resistance trend line (purple)
For the GBPUSD I would like to see a break of the 1.6160 level before trading it north up to 1.6320 tops of recent years, or a break of the uptrend channel before trading it south.
The USDJPY had a failed continuation of the earlier breakout of the weekly triangle. The failure resulted in a bigger pullback and second bounce off of the broken trend line (purple).
That bounce took place a day after the FOMC and totally engulfed the bearish FOMC day of Wednesday. Is this a confirmation signal that the upside break is now good to go?
It sure could! In that regard the candle lows of the daily engulfing twins at 97.80 is crucial. Any move down now could be a retracement of the candle twins for more upside, but a break of that level would put the bulls back in the fridge and label the breakout as a false one.
The first conservative target is the -0.272 at 101.90 and second target at the -0.618 is 103.50.
How do you view the USDJPY? Ready for trend continuation or do you see the USDJPY retracing deeper? Let us down below!
Last but not least, check out these links:
3) Make sure to join our trading room for this week’s trading! http://www.winnersedgetrading.com/trading-room-page/
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