USD Back In The Forex Saddle?

Hello Forex Traders,

Last week the FOMC statement sent fireworks through the currency market and the FED decision caused the US Dollar to soar.

 

See Nathan’s weekly Video here.

What movements are to be expected this week?

The last week of the month is always more risky to trade because positions tend to be closed from earlier in the month prior to the month end closure on Friday the 28th of June. Therefore be more careful this week, especially on Friday.

Anyhow, let’s dive into the charts, use the good old crystal ball for price predictions ;) and examine all of the majors!

EURUSD

Let us look at how to trade the EURUSD in this last week of June.

The first thing that reaches my radar above all are the bearish engulfing weekly candles on this EURUSD. This weekly candle has a close near the low, showing no signs of bullish support at the end of the week as well.

A candle stick pattern formation like this on a weekly chart should – in my humble opinion – never be neglected. So considering this, the EURUSD is back in bearish mode.

BUT … even weekly charts though, have higher time frames to deal with. In this case the impact of the monthly might play its role. This week will be the last week of this month candle, so this week will determine the monthly close as well! Here are the details of June so far:

Open month candle: 1,2993
Current high: 1,3414
Current low: 1,2956
Current price +/-: 1,31ish

06 21 EURUSD MONTH

Currently the month candle (which is to close to closing yet of course) translate this information:

1)      there is currently a massive wick on the top

2)      but the current price is not that far from the monthly low and open, which could be support

06 21 EURUSD WEEK

Scenario A:

If the monthly candle indeed closes at its current level or lower, then this would translate into bearish pressure for July. In order for the monthly candle to close that way, we would need to see a Doji candle at best or otherwise a bearish candle.

06 21 EURUSD WEEK 2

Scenario B:

But how about if the weekly candle makes a small inside candle, which retraces the bearish englufing twins? That would actually give a bullish close to the month of June and could signal bullish continuation in the long run.

At first July could see 1 or 2 weeks of bearishness, as a follow-up after te bearish engulfing twins and inside candle. This down move would then encounter support  as  the price level of July approaches the low of June and a rally might happen for the next 3 weeks.

06 21 EURUSD WEEK 3

Scenario C: a rally which breaks last week’s high. I highly doubt such a scenario could unfold as the bearish engulfing twins on the week chart have put me in bearish mood. The only questions are: how long and how far will the bears drive the EURUSD?

Summary

All in all, this week’s candle will have a massive importance for the shape and character of the monthly candle and therefore for the long-term direction.

That in itself makes this weekly candle a rough one to trade, together with the fact that all first and last candles are more difficult. Especially Friday will prove to be even trickier.

The only way to measure whether the EURUSD makes an immediate downside move or upside correction is by focusing on the shorter time frames.

For me the key resistance levels seem to be at the moment:

A)      The 1 hour high at 1,3150-60

B)      Followed by the 4 hour high at 1,3250

06 21 EURUSD 4 hr

For me the key support levels seem to be at the moment:

C)      The current bottom at 1,3080

D)     68 Fib at 1,3030

E)      Monthly low at 1,2950

We will keep a close eye on this one and provide updates on the development of this EURUSD as the week moves on.

GBPUSD

To me the GBPUSD has exacty the same setup going on as the EURUSD. The sama movements, analysis, and expectations apply to the Cable as with the EURUSD. Only the numbers differ :) that makes it short and simple! Read here more about the Cable from last week’s Thursday in depth article. 

AUDUSD

The AUDUSD is currently setup the most pleasantly, in comparison to the Cable and EURUSD. It has no complicated structure evolving, no support and resistance levels built in the chart at every turn. The AUDUSD is simple Forex trading at its best:

Down trend followed by a very bearish weekly candles.

What else does a Forex trader want more? This trend heaven for trend traders.

Range traders and reversals traders beware, the Aussie is not showing any signs of relief after last week‘s impressive push through the weekly 0,9350-0,94 support level.

I see no reason not to remain bearish. Any move up should be corrective and any breaks or break out trades of bear flags and triangles are great reasons for short.

A potential retracement back to the broken weekly wedge would be a sweet spot but let us see if the currency can move up that high. Targets for the moment are the big 0,9000 psychological level and targets at around 0,89. Mind you, that those ae initial targets… nothing says that this trend cannot continue to even lower grounds.

If you are need in guidance on Forex strategy building, dont miss out on my article of Friday. 

06 21 AUDUSD WEEK

USDJPY

The UJ has made quite some interesting moves last week. Here is a summary:

1)      An aggressive fast paced move up

2)      The up move managed to break the down trend line

3)      The weekly chart has posted a bullish weekly candle

This could mean that the UJ has encountered weekly – monthly support at the 886 Fibonacci retracement of the last move up or at the 382 retracement level of the entire move up.

Despite the massive up move, the UJ could potentially have reached resistance levels. So here to the questions begs:

Immediate upside continuation or downside correction followed by more support?

06 21 USDJPY day

Tricky and only price and time will tell.

In the longer-term future however, two important elements can play an integral role:

1) a potential EW channel (blue)

2) the AO retracing back to the zero line could indicate when the next up move is ready

So to summarize, of the 4 majors I have looked at today, the Aussie seems to be least complicated at the moment. Let us see how things evolve.

06 21 USDJPY WEEK

Thank you for reading and sharing this article!!!!

By the way, here is the article on Tech before you leave! 

Good Trading!!

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Chris is the head of the mentoring program and trading room at Winner's Edge Trading. He has a passion for technical analysis and helping Forex traders achieve their goals in trading. Chris has been trading for almost 10 years and is most fond of the Double Trend Trap (as a strategy), moving averages (as an indicator) and Fibonacci (as a tool).
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