FX: new week; new trend lines

This week: Trend line breakout trades have been most reliable over recent months and there are a batch of them in focus this week again this week. This post outlines the FX pairs setting up within either new or existing triangle and wedge patterns to monitor for potential new trading opportunities.

  • March: a new month begins on Wednesday so watch for any end of month flow activity and new monthly pivots.
  • US$: A review of the US$ index can be found through the following link and also this link. This is an important index to monitor as the next major move here may impact a number of FX pairs.
  • US President Trump: is addressing a joint session of Congress on Tuesday so watch for any impact on the US$ & risk appetite.
  • AUD/JPY and GBP/JPY: both were being stalked for triangle breakouts and both delivered in spades on Friday night.
  • Triangles/Wedges: there are trend lines to watch on the following FX pairs: EUR/USD, AUD/USD, NZD/USD, GBP/USD, USD/CAD, GBP/AUD, GBP/NZD, EUR/AID, EUR/NZD, EUR/GBP, EUR/CAD, AUD/NZD, USD/TRY and USD/CNH. NB: The fate of many of these consolidation patterns will most likely rest with the next major move on the US$ index.
  • Risk appetite: a new wave? Many commentators are noting the lofty levels on some stock indices as reason enough for caution but there are some charts suggesting that risk appetite is only just gearing up. Recent triangle breakouts with Junk Bonds, the NASDAQ and FTSE indices suggest an increased level of confidence:

JNK weekly

NASDAQ monthly

FTSE monthly

Last week: There were many profitable trend line breakout trades last week and a summary of these is below with links to posts showing charts of the breakout moves:

  • EUR/AUD: a triangle breakout gave 120 pips.
  • Gold: a triangle breakout initially gave 90 pips off the 4hr chart and 130 pips off the 15 min chart. This bullish breakout moved has since continued and is now up 190 pips (see charts later in this post).
  • EUR/NZD: a triangle breakout gave 120 pips.
  • GBP/USD: a triangle breakout gave 60 pips off the 4hr chart but 90 pips off the 15 min chart.
  • USD/TRY: a long-awaited wedge breakout move gave up to 450 pips before reversing.
  • AUD/JPY: a triangle breakout trade gave up to 90 pips on Friday night.

Calendar:

  • Mon 27th: USD Core Durable Goods.
  • Tue 28th: USD Prelim GDP, CB Consumer Confidence & President Trump address to joint session of Congress.
  • Wed 1st: AUD GDP. GBP Manufacturing PMI. CAD BoC Rate Statement. USD ISM Manufacturing PMI & Crude Inventories.
  • Thurs 2nd: GBP Construction PMI. CAD GDP. USD Weekly Unemployment Claims.
  • Fri 3rd: GBP Services PMI. USD ISM Non-Manufacturing PMI & Fed Chair Yellen speaks.

Forex:

EUR/USD: This pair remains choppy above trend line support.

Price is below the 4hr Cloud but in the bottom of the daily Cloud.

The weekly candle was bearish.

There isn’t any first tier data but note all of the second and third tier data for next week. Watch also for impact from US data:

  • I’m watching the daily chart triangle trend lines.

EUR/JPY: This pair finally broke down from the daily chart’s Flag pattern on Friday and the 15 min chart shows how a decent haul of pips could have been gathered from this bout of Yen strength.

I note that the 61.8% fib of the recent swing high is near the previous S/R of 115 so I’ll be watching to see if any continuation move targets that region. There is also another support trend line just near this S/R level (see on the daily and 4hr charts).

Price is below the 4hr & daily Cloud.

The weekly candle was bearish.

  • I’m watching the next support trend line on the daily chart and the 115 level.

AUD/USD: This pair could not manage a weekly close above 0.77 and is back trading within a 4hr chart triangle.

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

The weekly candle closed as bearish coloured Doji, making the third indecision style weekly candle.

There is only AUD GDP data to monitor this week but watch for impact from all of the US$ data.

  • I’m watching the 4hr chart’s triangle trend lines and the 0.77 level.

AUD/JPY: This pair gave a great triangle breakout trade on Friday and a summary of this trade can be found here.

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

The weekly candle was bearish.

I note that the 50% fib of the last major swing high move is down near the previous S/R level of 80 so I will watch that region if the daily/4hr chart’s support trend line is breached.

  • I’m watching the daily chart’s support trend line.

GBP/USD: The monthly chart shows that the cable has essentially chopped sideways for the last 4 months.

There is another triangle in play on the daily and 4hr chart to watch this week.

Price is in the bottom edge of the 4hr Cloud but above the daily Cloud.

The weekly candle closed as a bullish coloured Spinning Top; the fourth consecutive indecision-style weekly candle printed on this pair!

There is a bit of GBP PMI data to watch this week as well as all of the US$ data:

  • I’m watching the 4hr/daily chart triangle trend lines.

NZD/USD: The Kiwi closed the week sitting right on the fence at the 0.72 level. It is back within a 4hr triangle that is set within a larger, modified, daily triangle.

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

The weekly candle closed as a bullish coloured Doji reflecting indecision.

There is NZD Trade Balance data this week and, although this is noted as second tier, I think it should be considered high impact.

  • I’m watching the 4hr and daily chart’s triangle trend lines.

USD/JPY: Yen strength on Friday triggered a 4hr triangle breakout on this pair but price paused at the key 112 and previous S/R level; something I had warned about

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

The weekly candle was bearish.

I note on the daily chart that the 61.8% fib of the last major swing high move is down near 105 and so I’ll watch this region, as well as all other S/R and whole number levels, if the 112 level gives way.

There is no high impact JPY data but watch for impact from all of the US$ data.

  • I’m watching the 112 level for any make or break.

GBP/JPY: Friday’s bout of Yen strength helped this pair to trigger a long awaited triangle breakdown. The 15 min chart shows how this also offered a great low-risk trend trade.

I note that the 50% fib of the last major swing high move is down near S/R at 135 and so I’ll be keeping an eye on that region if the bearish move continues.

I’m also noting the lack of momentum on the weekly and daily charts though and so I’ll be keeping an open mind about any recovery move higher.

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

The weekly candle was a small bearish candle with a long upper shadow.

USD/CAD: I’m struggling with this pair and waiting for a clean make or break of the monthly triangle and 1.30 region.

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

The weekly candle was a bearish coloured Doji making two consecutive indecision style weekly candles.

There is a BoC rate statement and GDP data to monitor here this week.

USD/TRY: This finally gave a great wedge breakout trade during the week and one that was waited upon for five weeks. However, price action has since recovered a bit forming up yet another wedge to watch into next week.

The 15 min chart shows how this recovery move could have been caught in a low-risk high reward move during Friday’s late Europe & US sessions.

Price is below the 4hr Cloud but in the daily Clud.

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

  • I’m watching the 4hr chart’s wedge trend lines.

USD/MXN: Price broke down through the key 20 level last week but stalled right on the daily chart’s 61.8% fib near the whole number 19 level.

This price action has formed up a new wedge on the daily/4hr time frame giving traders new trend lines to watch for any breakout move. However, note how the 20 level is above current price but below this upper wedge trend line! Price may struggle to get back above this 20 zone as old support often turns into new resistance.

Price is below the 4hr and daily Cloud which is bearish.

  • I’m watching the wedge trend lines and the key 20 level.

Gold: Gold gave a triangle breakout trade last week that is now up 190 pips. Price closed the week above the key $1,250 and daily chart 50% fib levels but stalled at the weekly chart’s 200 EMA.

The 15 min chart shows how this time frame would have been great for catching these breakout moves.

I’m watching for any continuation move higher to test the monthly/weekly chart’s wedge trend line, and this intersects near the daily chart’s 61.8% fib at the $1,280 – $1,300 region, so this will be in focus in coming sessions.

Gold is above the 4hr and daily Cloud.

The weekly candle closed as large bullish candle.

Silver: I wrote an article about Silver on Friday that can be found through this link. In this article I noted the daily candle break of a bearish trend line but there has now been a weekly candle break of this trend line.

The 15 min chart shows how this bullish breakout could have been well caught on Thursday in a low risk high reward set up.

I note that the 61.8% fib of the weekly chart’s swing low move is up near previous S/R of $35 and so that would be in focus if the $20 level is broken.

Price is above the 4hr and daily Cloud.

The weekly candle was bullish.

  • I’m watching for any bullish continuation and test of the $20 S/R level.

Others: for all of the remaining charts take note of the consolidation triangle or wedge trend lines for any potential momentum-based breakout move.

USD/CNH 4hr:

GBP/AUD 4hr:

GBP/NZD 4hr:

EUR/AUD 4hr:

EUR/NZD 4hr:

EUR/CAD monthly:

AUD/NZD monthly:

EUR/GBP weekly:

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