Forex Opinion & Analysis
An Overview
After the bear breakout on January 3rd, the EUR/USD bear fulfilled the target of a second leg down. There will likely be buyers at the January 3rd bottom, and the market will continue to move sideways.
Since November 21st, the market has been in a bull channel, and bull channels often grow into trading ranges rather than bear trends, suggesting that sideways movement is most likely.
Furthermore, following January 3rd, the bears could not generate immediate follow-through selling. This increases the likelihood of additional sideways movement here.
Finally, during the January 3rd selloff, it was sensible to purchase the moving average. Those bulls who placed limit orders on the moving average are likely inclined to scale lower, increasing the likelihood of additional sideways trade.
Overall, the market is likely to fall and approach the November 30th or November 21st low (bottom of the channel); but, the market may have to go sideways for some time beforehand.
Next Week's Levels and Opportunities
USD/JPY requires a break at 134.20 to target 132.52 then. Lines at 136.00’s dropped to 1.3588 and continue the long slide lower.
GBP/JPY 163.00 also drops to 162.00 and specifically 162.09, above the target of 164.00’s. Oversold next week begins at low 158.00’s.
EUR/JPY must hold below 141.50 to target 140.13 easily.
AUD/JPY must trade below 91.39 and NZD/JPY 84.29. CAD/JPY trades between 99.19 and 97.59.
GBP/USD oversold begins at 1.1802 and higher requires a break above 1.1938.
AUD/USD holds a die-or-die position at 0.6731 and NZD/USD at 0.6210.
EUR/USD remains the outlier to AUD, NZD, and GBP at 1.0424.
GBP/USD was the first to break to lead AUD, NZD, and EUR/USD lower.
EUR/NZD traded to tops at 1.6937 yesterday and 1.6934 today. Once EUR/NZD ranges are firmly established, ranges hold for many weeks to allow continuous longs or shorts. For EUR/NZD since December, 1.6900’s tops offered many shorts and will last all of January.
EUR/AUD trades to 1.5300’s and 1.5200 targets on a break of 1.5486. EUR/AUD is similar to EUR/NZD as ranges once established hold for many weeks to offer multiple longs and shorts.
Overall currency markets trade in a fairly neutral position and wait on the DXY resolution to break 104.45 or 105.34 and 105.76.