FOREX TRADING

The USD was pressured to start the week, and continued further. However, it started to fight back against the JPY, and by Friday, it fought back across the board. The EUR/USD for example was projected to 1.2750 to start the week, and topped at 1.2720. Other USD-crosses look to be topping as well, and a pullback that is starting in the US session and may extend to the start of the next week, may provide clues to whether the market’s have actually topped.

EUR/USD Showing First Signs of Reversal

1H: The EUR/USD was in a diagonal triangle according to the 7.8.2010 update. The market did not reach 1.2740, but was held at 1.2720. Then there was a sharp slide in the European session until the start of the US session, when the decline paused.

I would like to see a rally attempt fail and that would help confirm the bearish outlook.

Weekly and Daily: The weekly chart shows that the market is testing a channel resistance, which is holding as of now. If the daily closes near 1.26, it can create an engulfing pattern in the daily, indicative of a reversal.

The weekly also shows one possible count. We may be in a C wave. If C = A, then the projection is 1.15. The count may be that we are finishing up 4 and heading into 5 of C.

The daily chart shows a trendline. If this is broken, there is more likelihood that 1.15 is the projection.

USD/JPY: Stalking Possible Bottom

Daily and 4H: Last week, I cautioned against picking a bottom for the USD/JPY. However, this week saw the market respect the 87 support level. Thursday’s move pushed the pair higher towards 89, a level of expected resistance noted last week.

If the market tops off where it is now, then we have a negative RSI reversal. In fact as long as the rally does not exceed 90.

This condition is also expected if the current swing is a C wave. At 89.96, C = 161.8% A. If C extends, it may not be a C wave, and instead of a correction, the current rally could be starting a bullish impulse wave where we are in wave 3. That means a subsequent decline should not go below 88.25 (end of wave 1).

To be honest, I don’t really have an opinion for USD/JPY inside of 88 and 95. At the 87 level, I had my reasons to avoid picking the bottom, but if the market picks it then that is what it will be. However, I am still not convinced that the bearish attempt in the intermediate term is over.

GBP/USD Respecting 1.52

Weekly and Daily: The greenback is also fighting back against the GBP/USD pair. In the weekly chart we see the pair testing a declining channel resistance. We also have a negative RSI reversal forming, if today’s decline continues for about another day.

We see that today’s price action signals a reversal, but the market needs to break below a rising support to truly confirm that this price action is just the beginning.

A swing projection goes to 1.40. I have been stalking this pair all week at 1.52, and now it is beginning to fall. I want to see a pullback to confirm that indeed bulls lost their momentum. The daily RSI was unable to cleanly break above 60, so the mode may still turn back to bearish.

To start the week, I wanna see if there can be one more confirmation. The 4H RSI at the moment is testing 40, if it can break below, and if you see 1H RSI go way below 30, you have signs that a strong bearish attempt is developing.

USD/CAD Ranging with Strong Volatility

Daily and 4H: The USD/CAD is in sideways action, with slight bearish bias, and has been choppy. Characteristics that make uncertainty hard to deal with. However after this week’s slide, it appears a range was formed.

The resistance is near 1.08 and the support near 1.0150. We can also see support near 0.9950.

Honestly, I have trouble assessing this pair except for the fact that it has been ranging after declining for a while.

EUR/GBP Euro Trying to Turn the Corner

Weekly and Daily: The EUR/GBP pair is reversing sharply. The past 2 week’s have seen the pair establish a bottom at 0.8070.

The weekly shows that the current rally is within the context of a larger decline. The rally came after the pair was unable to break below the 50% retracement level near 0.81. This is also the powerline that acted as resistance in a previous period of consolidation.

The market still looks overall bearish for the pair, but short-term momentum might bring it towards levels with stronger resistance.

The daily shows that the rally is about to test a fast declining channel resistance. The 50% retracement level lies just above at 0.8420. So far, the pair has rallied through many topping patterns. The has shown some topping actions, but were not confirmed by pullback.

If the pair breaks above the channel resistace at 0.8450, further rally towards 0.88 can follow.

AUD/USD Momentum Reflects Ranging Mode

Daily: The AUD/USD pair has been moving sharply back and forth. After finding resistance at 0.8870 are, it has fallen sharply, but was supported at 0.83. The RSI was also supported at 40, suggesting that the market is in a ranging mode.

If the market tops off at 0.88, a decline may go to the 0.8250 area for a swing projection.

Look in 4H and 1H charts to see if topping occurs next week. Here the greenback could not really fight back against the strength in the Aussie. It was only by week’s end that there were some consolidation.

GBP/JPY – Possible Double Top; If not, Resistance Lies at 135.30

Daily and 4H: The daily chart shows the GBP/JPY pair in sideways action between 136 and 131. The market is in the middle of this range, so there is not a strong opinion for the pair in either direction.

However we do see some possible topping in the 4H chart, as the market attempts to complete a double top. A break below 133 suggests a decline towards 130.60, but we have see support at 131.

Another possibility is that the “double top” is just a flat correction, and a rally can follow to the 135.30/50 area. There is resistance here. This will make a C=150% to 161.8% of A, assuming we are in a type of wave C. This is also near a former top, but we know 136 is the resistance level, 135.30/50 is just a projection of the currently.