Technical Analysis 17 July: Markets are Trending Again
EURUSD, Daily timeframe
Pair in Uptrend
On Friday, the pair gained 68 pips in and closed the day with an impulsive bullish candle. The uptrend is in full swing and we’ll be looking for suitable levels to take long positions. Just as a reminder, the approach is to take positions in direction of the major movement and never against it. What are the possible scenarios to develop from here:
As per Scenario 1 from July 7th, the short-term resistance at 1.1450 has now been breached. The pair closed around 1.1467 on Friday. The level at 1.1450 that was once a resistance is now a potential support level. Price could advance further, reaching out towards our first target at 1.1500, next is 1.1550 and the third target is located at 1.1600. Price could go for those levels straight away and never look back or it could test 1.1450 which could potentailly offer points of entry for long trades.
Price starts to move sideways before the ECB decision this week on Thursday. If this scenario takes place, it will be only prior to the decision. Usually, price continues to move on its way in line with the trend after the event has sunk in.
We could witness a retracement to previous levels. Those levels are: 1.1450, next level is 1.1400 and 1.1300. We’d be looking for bullish rejections on the H4 timeframe from one of those levels to potentailly intiate longs. If we don’t see a bullish signal, stay flat.
GBPUSD, Daily timeframe
Pair in Uptrend
On Friday, the pound gained an impressive 160 pips, broke the Resistance we’ve been discussing at 1.3050 and reached 1.3100 level. From now on, the direction we’re aming for is North, thus we’d be looking for longs. What scenarios could evolve from here?
Scenario 1: Price could continue to edge up without testing near -term support. In this scenario potential targets to be reached are: Target 1 at 1.3150, next level is 1.3200 and then 1.3250
Scenario 2: Price could sink below 1.3050 and close for the day below it. If this happens, it will be back in the channel and probably head for a restest of the near -term support at 1.2800. A deeper retest could present opportunities for long frombetter prices around 1.2618. It’s crucial to rememeber, that a valid signal for long trades should be represented at least by a H4 bullish candle rejecting either the immediate support at 1.3050, or rejecting the levels around 1.2800 and the farther 1.2618.
Scenario 3: If some unexpected news hits the wires and affects the pound negatively in a major way, the Uptrend could be challenged only if price gets hammered in a short amount of time and closes for the week below 1.2618.
AUDUSD, Daily timeframe
Pair is challenging the range
The Australian dollar has been extremely determined in its upward movement and on Friday it broke out of the pivotal Resistance level at 0.7750. For six consecutive days, the Australian dollar has been led by the bulls. The pair score about 100 pips on Friday into positive terriotry and a massive 220 pips for the entire week. The impulsive bullish candle will give us futher grounds to look for long positions. Probably, you might have noticed that the major currency pairs are leading against the US dollar. So, what scenarios could develop from here?
Scenario 1: In line with the freshly formed Uptrend of the pair which is still yet to develop, we’d be looking for trades upon retesting the previous resistance level at 0.7750. So, we’d be looking to take positions from better prices in this case. An absolute must is a 4-Hour candle that must bounce from the now near-term support at 0.7750. Target levels are 0.7800, then 0.7850 , 0.7900 levels and then 0.7950
Scenario 2: Price doesn’t look back and heads straight for the targets described in Scenario 1.
Scenario 3: Price moves back and closes for the day below 0.7750. We’re back in the range once again and no longs should be intiated until we see a clear signal that the bulls are back in charge. Price could fall as far as 0.7705, where we have a support level. In this case, only upon a bullish rejection on the 4-Hour timeframe (it would be even better if the bullish rejection is on the Daily timeframe for a more conservative approach), only then there could be a valid signal for a long position. Targets in Scenario 3 would be 0.7750 and then 0.7800.
Gold (in a wide range)
Bias: Bulls are back in the game
It really interesting to see how much all markets are related to each other. As the U.S. dollar started to weaken, we can see how investors’ choice of safe haven is again the precious metal. We had a very strong Friday for Gold. So, we are yet to see if bulls will step in again with more conviction during this week.
Scenario 1: Even though we had a great bullish Friday for Gold, it’sgood to rememeber that sometimes price likes to restest recently formed levels. The immediate support is located at 1210.50. If price retests it again, we shoudl wait for another Daily bullish rejection to potentially enter a long trade. Before that happens, we’d have to wait patiently.
Scenario 2: Price doesn’t make a retest and heads straight to test the near -term resistance level at 1239.40. If it manages to surmount and break above it and close, then targets to aim for are located at 1260.10 and then the far out target level at 1300.36. As you can see, it’s a long ride to those levels but worth the waiting.
Scenario 3: If price closes below1210.40 for the day, stay flat. The bias is no longer bullish.
Wishing you happy and successful trading!
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