The Australian Dollar has been on a tear ahead of the Reserve Bank of Australia interest rate decision. The extra long wick on recent the hammer formation foreshadowed Friday’s strong breakout. This morning, the AUDUSD blew past resistance at 0.9050 and as long as it closes above that level, expect a possible test of the multi decade high of 0.9400.
| Currency | Candlestick Formation | Bias | About the Candlestick Warrior: I am a big believer of Paralysis by Analysis. I feel that most chartists use too many technical indicators or always try to find the perfect combination of indicators that validates their trade idea. That’s why I like to keep things simple, basing my trading decisions almost exclusively on Japanese candlestick formations. Here’s where I think currencies are headed this week. Let me know what you think my analysis on the Candlestick forum | |||||
| EUR/USD | Doji and Triple Top | ST Bearish | ||||||
| GBP/USD | Spinning Tops | Bearish | ||||||
| USD/JPY | Three Inside Up Formation | ST Bullish | ||||||
| AUD/USD | Hammer and Breakout | Bullish | ||||||
| NZD/USD | Hammer on Weekly Charts | Bullish | ||||||
| USD/CAD | Three Outside Down | Bearish | ||||||
EUR/USD Daily Chart
Trading Strategy
1. Short EUR/USD now (1.4815) with a stop around 1.4945. Lock in profits on half of the at 1.4685, move stop on rest to breakeven, targeting 3 times risk at 1.4425
2. Buy EUR/USD on a break of 1.4933 with a stop below 1.4800. Lock in profits on half of the position at 1.5065, move stop on rest to breakeven, targeting 3 times risk at 1.5332.
Arguments for Short Term Weakness
1. Triple Top on Daily Charts
2. Long Legged Doji on Daily Charts
3. Price Below First Standard Deviation Bollinger Band on Daily Charts
Long Term Strength
1. Hammer on Weekly Charts
2. MACD Still in PositiveTerritory
3. Price Opens Above First Standard Deviation Bollinger Band on Weekly Charts
EUR/USD Daily Chart
GBP/USD Daily Chart
GBP/USD Trading Strategy
1. Stay Short (now 1.9760) with a stop at 1.9925. Lock in profits on half of the position at 1.9615, move stop on rest to breakeven, targeting 1.9350.
2. Buy after a daily close above 1.9925 with a stop below 1.9800 stop. Lock in profits on half of the position at 2.00, move stop on rest to breakeven, targeting 2.02.
Arguments for Fading Strength
1. Spinning Tops
2. Long Candle on Friday, Closed at Day’s Low
3. Shooting Star on Weekly Charts
Arguments for a Rebound
1. Downtrend line broken
USD/JPY Weekly Chart
1. Long USDJPY (now 106.68) with a stop at 105.50 (1/21, 1/22 and 1/31 low). Lock in profits on half of the position at 107.85, move stop on rest to breakeven, targeting 109.90 (50-SMA)
2. Short (now 106.68) with a stop at 108.00. Lock in profits on half of the position at 105.50, move stop on rest to breakeven, targeting 101.70.
Arguments for a Bottom
1. Long Legged Doji on Weekly Chart
2. Triangle Formation on Weekly Chart
3. Three Inside Up Formation on Daily Chart
4. MACD in PositiveTerritory, Hammer on Friday (Daily Chart)
Arguments for Further Weakness
1. Prior Low of 107.22 Already Breached
2. Inverse Hammer on Daily Charts as Well, Bottom Also Broken
AUD/USD Daily Chart
AUD/USD Trading Strategy
1. Stay long (now at 0.9088) with a stop at 0.9040. Sell half of the position at 0.9140, move stop on rest to breakeven, targeting 0.9235
2. Short on a close below 0.9040 with a stop at 0.9088. Lock in profits on half of the position at 0.8992, move stop on rest to breakeven, targeting 0.8890
Arguments for Further Gains
1. Breakout of Former Resistance at 0.9050
2. Recent Hammer on Daily and Weekly Charts
3. 10 and 20-day SMA Crossing the 100-day SMA
4. Bullish Marubozu like formation on Daily and Weekly Chart
NZD/USD Weekly Chart
NZD/USD Trading Strategy
1. Stay long (now at 0.7935) with a stop at 0.7880. Sell half of the position at 0.7990, move stop on rest to breakeven, targeting 0.8100
2. Short on a close below 0.7850 with a stop at 0.7900. Lock in profits on half of the position at 0.7800, move stop on rest to breakeven, targeting 0.7700.
Arguments for Further Gains
1. Breakout of 4 month trading range
2. Hammer on Weekly Charts
3. Three White Soldiers on Daily Chart
USD/CAD Weekly Chart
USD/CAD Trading Strategy
1. Short now (0.9942) with a stop at 1.0120. Buy back half of the position at 0.9764, move stop on rest to breakeven target 0.9075 (11/07 low)
2. Long on a close above 1.0120 with a stop at 1.0000. Sell half of the position at 1.0240, move stop on rest to breakeven, targeting 1.0500
Arguments for Further Weakness
1. Three Outside Down on Weekly Chart
2. Identical Three Crows on Daily Chart
3. Trendline Break
Arguments for a Rebound
1. Triple Bottom on Daily Charts, Matching Lows
