FX: another week with more TLs to watch

This week: Trend line breakout trades have been very successful over recent weeks and there are more trend lines in focus again this week. I suggest that the following patterns are worth watching: daily triangles on the EUR/USD, AUD/JPY, GBP/USD and GBP/JPY, a 4hr triangle on the NZD/USD and a daily chart wedge pattern on the EUR/JPY, USD/JPY and Gold. There have been recent significant trend lines breaks on the AUD/USD, USD/CAD, GBP/NZD and USD/TRY but the first two are near major horizontal S/R levels that need monitoring in coming sessions. The USD/MXN is honing in on a potential horizontal S/R as well and so, as you can see, there are plenty of pairs offering levels to watch for potential momentum-based breakout moves.

Data: there isn’t much USD related data this week but there are Central Bank rate updates from the RBA (AUD) and RBNZ (NZD) and CNY Trade Balance data that will be of interest given the recent strength seen with the Aussie and Kiwi.

US$: The US$ will be in focus again this week as the next directional move on the index has the potential to impact a number of the major currency pairs. A review of the US$ index can be found through this link.

Last week: Once again, we’ve had a week where there were many successful trend line breakout trades although there was one decent sized dud as well and the pip tally, excluding the large move on the USD/MXN, was up over 1,700 pips. Add this exotic pair in though and then the tally was over 3,000 pips! All from simple, momentum-based trend line breakout moves with the trend lines flagged in advance throughout my posts. Link to the charts and and a summary of these breakout moves are detailed below:

GBP/NZD: trend line breakout trade gave up to 200 pips.
USD/TRY: trend line breakout trade gave up to 500 pips.
Silver: trend line breakout trade gave up to 0.35 cents.
EUR/AUD: trend line breakout trade gave up to 60 pips.
NZD/USD: trend line breakout trade gave up to 50 pips.
EUR/USD: trend line breakout trade gave up to 50 pips.
GBP/JPY: trend line breakout trade gave up to 200 pips.
GBP/AUD: trend line breakout trade gave up to 150 pips.
GBP/USD: trend line breakout trade gave up to 100 pips.
EUR/AUD: a second trend line breakout trade gave up to 70 pips.
USD/MXN: trend line breakout trade gave up to 1,400 pips.
USD/TRY: trend line breakout trade gave up to 300 pips.
AUD/USD: trend line breakout trade gave up to 90 pips.
GBP/NZD: this was a failure.

Calendar:

Mon 6th: NZD Bank Holiday. AUD Retail Sales.
Tue 7th: NZD Inflation Expectations. AUD RBA Rate decision. CAD Trade Balance. NZD GDT Price Index.
Wed 8th: USD Crude Oil Inventories.
Thurs 9th: NZD RBNZ Rate decision, Press Conference and Gov Wheeler speech. AUD RBA Gov Lowe speaks. USD Weekly Unemployment Claims.
Fri 10th: AUD RBA Monetary Policy Statement. CNY Trade Balance. CAD Employment data. USD Prelim UoM Consumer Sentiment.

Forex:

EUR/USD: There is a daily chart triangle to watch for any momentum-based trend line breakout.

The January candle closed as large bullish candle almost engulfing the bearish December candle.

Price is above the 4hr Cloud but in the daily Cloud so action could be choppy here whilst it remains in this congested zone.

There is no high impact EUR data this week but a bit of second tier data to monitor.

EUR/JPY: There is a daily chart wedge pattern to watch for any momentum-based trend line breakout.

The January candle closed as a small bearish coloured Spinning Top reflecting indecision.

Price is below the 4hr Cloud but in the daily Cloud so action could be choppy here whilst it remains in this congested zone.

There is no high impact EUR data this week but a bit of second tier data to monitor.

AUD/USD: There has now been a weekly candle close above the 3¹/₂ year bear trend line and this is a bullish development. Price action stalled though at the end of last week below the whole-number 0.77 level and this will be the region to watch in coming sessions for any make or break activity. The weekly chart shows that there is a more recent 12-month wedge pattern in play and the upper trend line of this wedge is just above the 0.77 level.

The January candle was essentially a bullish engulfing candle.

Price is above the 4hr and daily Cloud.

Watch for any impact from this week’s RBA interest rate update and CNY Trade Balance data.

AUD/JPY: There is a triangle forming up under the 87 level on the daily chart time frame to watch for any momentum-based trend line breakout. Keep an eye on the 89 level as well as this is a major S/R inflection zone for this pair. This pair is highly correlated with stocks so bullish continuation there could help drag this pair higher too.

The January candle was bullish and the new February one is too for now.

Price is above the 4hr and daily Cloud.

Watch for any impact from this week’s RBA interest rate update.

GBP/USD: The monthly chart shows price action looks to be trying to carve out a base off the 1.20 region and the January candle had a bullish-reversal ‘inverted hammer’ look to it as well. The weekly chart though has yet to print either a higher High or higher Low suggesting that the down trend is over so keep watching this chart for clues. Note also there is a triangle in play on the daily chart time frame giving us trend lines to watch for any make or break activity.

Price is in the 4hr Cloud and just above the daily Cloud.

There is GBP Manufacturing data to watch for impact this week as well as the slated USD related data.

NZD/USD: The January candle was a huge bullish engulfing candle. The weekly chart also shows there has been a bullish triangle breakout but price action stalled last week around the 0.73 S/R level. This consolidation around 0.73 has set up a 4hr-based triangle to watch for any make or break activity.

Price is above the 4hr and daily Cloud which is bullish.

There is a bit of NZD data this week including Inflation expectation data, an RBNZ Interest rate update and Gov Wheeler speeches as well as GDT price index data. Watch also for impact from CNY Trade Balance data and any US-related data.

USD/JPY: This pair remains in a descending wedge on the daily/4hr time frame so watch these trend lines for any make or break activity. The 4hr chart also shows that the 112 and 112.50 levels are offering some support so keep an eye on these levels too.

The January candle was, essentially, a bearish engulfing candle.

Price is below the 4hr Cloud but in the daily Cloud and so action may continue to be choppy whilst trading within this congested zone.

There isn’t much USD data this week other than Crude Oil data, Weekly Unemployment Claims and UoM Consumer Sentiment but watch for ongoing impact from the new US political situation.

GBP/JPY: There is a triangle on the daily chart time frame to watch for any momentum-based trend line breakout as price action seems to be consolidating below the major S/R level of 147.

The January candle closed as bearish and the new February candle is bearish for now as well.

Price is below the 4hr Cloud but in the daily Cloud so this pair could remain choppy until it clears this zone.

There is GBP Manufacturing data to watch for impact this week.

USD/CAD: The January candle was a huge bearish candle and it closed below the bottom trend line of a monthly-chart triangle pattern suggesting there could be some bearish follow-through. However, the major S/R level of 1.30 remains just below current price and I would want to see a weekly, and then monthly, close below this level to be more confident about any bearish continuation.

Price is now below the 4hr, daily and weekly Ichimoku Cloud which is bearish.

There is CAD Trade Balance and Employment data to impact here this week.

GBP/NZD: This pair had looked last week to be attempting a bullish trend line breakout but this effort failed and price action closed the week back under the 18-month bear trend line.

Price is now back below the 4hr and daily Cloud so there may be another test of the 1.67 S/R region ‘Low’ so watch for any make or break of this region.

There is GBP Manufacturing data to watch for impact this week as well as an NZD Inflation expectation, and RBNZ Interest rate update and Gov Wheeler speeches as well as GDT price index data.

USD/MXN: I noted last week how this pair had set up with a bearish-reversal ‘Evening Star’ pattern and this proved to be excellent guidance as the pair closed lower for the week in the order of about 5,000 pips!

The January candle closed green for the month but with a bearish ‘pin bar’ structure suggesting at least caution was required; if nothing else. A long-term support trend line remains in play and price action is still printing higher Highs and higher Lows on the weekly chart time frame for now. However, the 20 / 20.15 region is recent S/R and this may attract price action to test the strength of this support. The recent bearish move is forming up a descending channel on the 4hr chart giving us trend lines to watch for any breakout move as well. Note how any bounce up from the 20 / 20.15 zone would help to shape up a H&S pattern!

Price is below the 4hr Cloud but in the daily Cloud so action may be choppy whilst within this congested zone.

Watch out for any impact from USD-related data and continued political banter about the proposed Mexican ‘Wall’.

USD/TRY: This pair printed a large bearish weekly candle that has pierced through a recent support trend line. My fibs of the recent swing high move show the 61.8% fib is down just above the major S/R region of 3.10 and so I’d be watching this area if there is any bearish continuation.

Price is below the 4hr Cloud but above the daily Cloud.

Gold: I’d mentioned last week that Gold could be choppy around the $1,200 level and that is exactly what we saw! Price recovered off lows to move back above $1,200 only to pull back and test this support before moving back higher, but, all of this evolved with declining 4hr chart momentum.

Gold closed the week back above the $1,200 S/R level but the consolidation around this region has the metal trading in a 4hr chart triangle and this is set within a descending wedge on the daily chart. Price action is currently just under the upper trend line of both of these patterns giving traders a region to watch for any make or break activity in the coming week. Keep an eye on the US$ though as sentiment there will have an impact on this, and other, commodities.

Price is above the 4hr Cloud but remains in the daily Cloud for now so watch for continued choppiness whilst the metal remains in this congested zone.