Technical Analysis October 18th: Markets await news
EURUSD, Daily timeframe
Bias: Pair in Uptrend
Yesterday, the pair dropped about 40 pips and we’re currently in a retracing mode. Price is constricted between 1.1900 and 1.1700/1.1600 support area. So, what follows from now on?
In line with the uptrend, price could make a recovery from the following levels: 1.1700, 1.1600. These areas could offer opportunities with better (lower prices to trade from). The opportunity will be considered a valid setup if a daily bullish rejection candle occurs from the respective levels.
If price is temporarily moving between 1.1900 and 1.1700 levels, this would suggest a ranging motion. We’re not interested in such setups. A much higher profit potential stands with trending movements, those are the ones that we’re aiming to capture.
It is only if price gets hammered below the major 1.1109 that we would be in a bear market. Any trades below that levels should be with a short bias in mind.
GBPUSD, Daily timeframe
Bias: Pair in Uptrend
The cable fell about 80 pips on Tuesday, thus showing a movement of correction and a short-term negative movement. We’re in an established uptrend and currently the price is moving against the predominant direction. This means we should await the proper time and have our levels to do potentially business from established before the action has taken places.
We could see price test the immediate support at 1.3050. This is also a level where we could witness the pair resume back to its bullish course action. An obligatory element is a bullish rejection candle exhibiting strength from that area. Targets above are 1.3300, 1.3650 and 1.3840.
The pair could be consolidating between the support at 1.3050 and the resistance at 1.3300. In this scenario, we’d have to wait for breakout to either side for more clarity. We’re not interested in trading tight consolidations (a.k.a. ranges).
A line is the sand is the major area at 1.2618. This is the pivotal level that draws a line between the bull and the bear market of the pound against the dollar. Below that market, it’s all downhill for the cable.
AUDUSD, Daily Timeframe
Bias: (Up) trending again
The Aussie fell about 28 pips yesterday- but it is more important to note that the day closed toward the opening price which might be a sign that the pair tries to recover and doesn’t want to drop further. On our watch list are the following developments:
Price could recover and start making bullish advancements toward the immediate resistance at 0.7900. If this level is transcended by the pair and price closes the day considerably above it, this could be an opportunity to go long with the trend. Targets above are 0.8066, 0.8100 and 0.8150.
There could be a retest of the immediate support level at 0.7750. The retracement would be halted if there if the bulls take over and positive price action is resumed. This might be a chance to go long. Of course, we need the obligatory element of bullish price action to show a rejection of the level on the larger daily timeframe. See targets is Scenario 1.
If a news-driven event strengthens the dollar against the Aussie beyond the 0.7750 support level and the day closes below it, then bias would be tilted to the negative side in the short –term. No long positions to be initiated in this scenario.
Bias: Strong bullish
The day was bearish for the precious metal with about 115 pips down. This is a delicate moment. Last week’s price action was clearly bullish, so we’re expecting a recovery from price. A recovery would be I place if the bulls regain control of price action and activity stays above the closing price of last week’s candle. A long position would be shaken if this week closes below 1274.01. This would nullify the price movement of the week before and short bias could invade the market and change the picture and positioning.
Price moving higher above the immediate level at 1300.36 would be a confirmation for bullishness and a potential green light to go long. Target above is 1350.00
A negative price action where price closes below the support at 1260.70 would suggest further weakness. Below that level, the bias would be short-term negative and no long positions should be initiated. Next level is the support at 1239.41.
Wishing you happy and successful trading!
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