- USDJPY teeters, significant technical confluence next week.
- GBPUSD weekly key reversal at major resistance
- USDMXN possibly setting up for a huge move later this year
Subscribe to Jamie Saettele’s distribution list in order to receive FX trading strategy delivered to your inbox.
Jamie is the author of Sentiment in the Forex Market.
Daily
Chart Prepared by Jamie Saettele, CMT
Automate trades with Mirror Trader
-USDJPY closed the week below the trendline that originates from the June low. It is possible that a 3 month triangle is complete. This is the working assumption as long as price is below 98.72.
-The decline from July would consist of 2 equal waves at 94.89. This level intersects channel support that originates at the July high AND the channel that originates from the March 2012 high on Wednesday!
-The channels are ‘Elliott’ channels. The short term downward sloping channel is a corrective channel. The long term upward sloping channel is an impulsive channel.
Trading Strategy: Picture is bearish below 98.72 but have to be aware of the mentioned channel confluence as a huge level at 95. What happens there likely determines the next big move (to either 90 or above the May high).
GBPUSD
Weekly
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
Automate trades with Mirror Trader
-The Jan 2nd close at 1.6252 nailed the high so far, which came in at 1.6259. Resistance this week was reinforced by a 4 year resistance line.
–A key reversal week (new high and close below prior close) unfolded this week.
–EURGBP (see last week) technicals are favorable for a more important top forming in GBPUSD.
Trading Strategy: Response of market to trendline and first day of year close (1.5952) bodes well for larger top. 9/24 low at 1.5954 and 21 day average at 1.5981 may inspire a pop…before another leg lower. Have 1.6140 in mind (‘no taper’ day close…huge volume that day) as level to get short. If things get ugly early next week (has to be early) then the uncovered close at 1.5876 (9/13) may come into play as support.
Daily
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
Automate trades with Mirror Trader
-USDMXN has been trading in a broad range since the June high. The pattern may take the form of a 3 point ascending triangle. Such patterns have the ability to produce intense bullish market moves.
-Thursday’s spike probably caps the advance for a bit. Levels to watch for support are the 50% and 61.8% retracements of the rally from the September low at 12.96 and 12.87.
Daily
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
Automate trades with Mirror Trader
-An ending diagonal (wedge) formed from the March 2011 high to the August 2012 low. Diagonals are often fully retraced, therefore the objective is the origin of the diagonal at 1.9564.
-An inverse head(s) and shoulders may be forming since February 2012. The pattern is slightly upward sloping, making it especially (potentially) powerful (see a completed version on EURAUD below). Exceeding 1.7274 would complete the pattern. Incidentally, the measured objective would be just pips from the origin of the mentioned diagonal.
Trading Strategy: Near term picture isn’t there yet. Failed rally this week suggests that we allow for at least sideways trading if not a test of the September high.
— Written by Jamie Saettele, CMT, Senior Technical Strategist for DailyFX.com
To contact Jamie e-mail jsaettele@dailyfx.com. Follow him on Twitter @JamieSaettele