FOREX TRADING

The risk sentiments in the global markets stabilized this week after sliding last week. We saw the Japanese Yen and the Greenback lose some of its flight to safety appeal. Friday saw some of this fizzle but both currencies were still pressured within this week’s context. The GBP however was hit on Friday, as it posted poor manufacturing data. Let’s take a look at what we can expect next week.

EUR/USD Still Pointing South to 1.17

Daily and 4H: The continued slid last Friday below the 1.2150 support. This week, the EUR/USD pair crawled back up to retest the 1.2150 level.

The 4H time-frame shows new negative reversals forming, suggesting this market is still very bearish and that the 1.17 projection is still valid.

The daily chart shows we may be in a third wave, so a sharp decline may be coming next week.

However, I am not so convinced the internals of this week’s rally correction is over. So monitor the rising support in the 4H and 1H charts. If that breaks, then it is more likely the market is ready to head lower to 1.17.

USD/JPY Similar Dynamics to Risk Sentiment Keeps Pair Ranging

Daily and 4H: Both the USD and JPY are currently affected by risk sentiments in similar ways. In the daily time-frame, we can see that the pair has been ranging between 95 and 88 in the intermediate term.

The 4H chart shows that the market is a narrow range between 91 and 92.

The daily RSI shows some short term bullish momentum but it is developing a negative reversal since the rally attempt has been weak compared to the decline that brought the pair from 95 to 89.

Therefore even though the pair is in ranging mode in the intermediate term, it is bearish in the short-term, but slightly bullish in the near-term.

The bearish outlook has a target of 88.30, seen in the daily, as suggested by a negative revesral.

GBP/USD Stalking Consolidation

4H and Daily: The USD was also week against the GBP for most part of the week. The market rallied within a rising channel, but when it hit the channel resistance along with the 200 period simple moving average in the 4H chart, it declined sharply. This move was accompanied by poor UK manufacturing data.

The daily shows the projection towards 1.3925. But the 1.40 may provide some psychological support as well.

USD/CAD Choppy and Bearish

Weekly and Daily: The USD/CAD is continuing its decline, right after ending last week with bullish attempt. The market is now testing 1.03, 61.8% retracement. The weekly shows a negative reversal suggesting another test of parity, and possibly lower to 0.97.

The daily however, is showing a possible bullish reversal.

The pair is very choppy as can be seen by the different signals in different time-frames. The market is however bearish. But signals will likely lag significantly because the market is also very choppy. Stalking this pair by paying attention to candlestick action can be very difficult.

In anycase, the most likely scenario is that the market will continue lower next week, to test 1.02.

EUR/GBP Due for a Correction

Daily and 4H: The EUR/GBP pair may be looking at a bit of a correction next week. The market’s decline seen in the daily chart is throwing over below the channel support. This is a sign that it is a third wave in that time-frame.

This is 50% retracement of a larger rally not shown, but to the left of the daily chart.

The 4H chart shows that we may be in an (a)-(b)-(c) correction, and is developing a (c) wave.

In the 4H chart, if the RSI breaks above 60 (which it is testing), then it can be confirmed that we are indeed in this correction, but may already be towards the end of it.

Now, there is also a possibility this correction may end up being a longer consolidation.

In the daily, wave 2 was a zig zag type correction. Therefore, I would anticipate form, although this is not a rule but a guide.

So there is a possibility that wave (c) could stop below 0.8350, as this would be a flat correction. It is also possible we will be looking at a longer correction in terms of time to complete.

If the market continues to rally, there should be some resistance at 0.8450. In any case, we are in wave (c), so anticipate some correction rally next week towards 0.8450 if 0.8340 does not hold.

AUD/USD in Wave (c)

Daily and 4H: As we see in the daily chart, we are still in correction, and probably in wave (c). A flat correction means (c) should top off very soon. There is a negative reversal forming suggesting a retest of the current low at 0.8070.

The 4H chart shows the internal to this week’s rally. I am looking for wave 4, so I can anticipate wave 5, and topping action. wave 4, should be different from the previous declines within the channel, all being short 1-wavers.

However, if the market continues to throw-over the channel resistance, we are still in wave 3, and a push towards 0.87 – 50% retracement seen in daily chart- is probably next. Also wave (c) can be something like 150% of (a) also suggesting a projection near this level, maybe slightly higher like 0.8750.

GBP/JPY: Twisting and Turning

Daily and 4H: Stalking the GBP/JPY can be like riding a wild stallion. This week’s sharp rally, and equally sharp decline to end reflects this comparison. The daily chart shows that momentum is bearish, and a negative reversal projection targets 123 area.

Today’s decline improves the chance of that in the intermediate term. However in the short intermediate term we can see 131 and 128 as support. In the near-term, the decline is supported just below 133. A wave following that may go to 131.