Booking profits on half of our short Euro and all of our short Australian Dollar exposure yielded over 680 pips last week. Looking ahead, the major currencies look to be diverging against the US Dollar: the antipodeans are aiming to extend bullish momentum, the British Pound is losing steam, and both the Euro and the Yen stand at the threshold of make-or-break technical levels.
EUR/USD
Strategy: Short at 1.5510, Targeting 1.2453
Weekly Profit / Loss: +106 pips
We first sold EURUSD at 1.5510 and then added to the position at 1.3364. Last week, the pair broke above the upper boundary of the falling channel that had contained price action since mid-January, prompting us to book profits on half of the position as a precaution, yielding 516 pips. The pair now stands squarely ahead of resistance at 1.3065, a level that has acted as significant support and resistance at least since October of last year. While it is certainly premature to call the rally over, it is plausible for a near-top to form at this key juncture. We will remain short and monitor price action in the coming days for any signs that bullish momentum has been exhausted.
For more resources on the EURUSD, please visit the DailyFX Euro Currency Room.
GBP/USD
Strategy: Flat
Last week, we saw GBPUSD hinting at the possibility of a rebound with a Star candlestick above support at the previous swing bottom (1.3731). Indeed, prices moved higher and now find themselves pushing up against the upper boundary of a bearish channel that has contained the pair since February. A bearish Star candle is in and prices are moving lower, opening the door for the possibility of a confirmed Evening Star bearish reversal pattern on the close. Alternatively, a break above the channel top sees resistance at a falling trend line connecting major highs since October. We will remain flat for the moment but remain on the lookout for an opportunity to sell.
For more resources on the GBPUSD, please visit the DailyFX British Pound Currency Room.
USD/JPY
Strategy: Flat
Recent trading has seen USDJPY stubbornly confined to a 200-pip range above 96.70. Turning to the weekly chart for a bit of perspective, we see the pair is showing a long-legged Doji candlestick below 99.12, a level that has acted as both significant support and resistance for over a year. A confident bearish close on the current candle would signal that the bears are back in control. Alternatively, the stage would be set for a major rally (aiming in the vicinity of 110.00) should USDJPY produce a weekly close above resistance. We will remain flat for now, waiting for confirmation.
For more resources on the USDJPY, please visit the DailyFX Japanese Yen Currency Room.
USD/CAD
Strategy: Long at 1.2188, Targeting above 1.30
Weekly Profit / Loss: -171 pips
We initially bought USDCAD 1.2188. Last week, we saw the pair retreat to support at January’s swing top near 1.27 and enter consolidation. Positioning has largely remained unchanged this time around, though a pair of Doji candles at support and the increasing proximity of a rising trend line hint at the possibility of a bullish turn in the coming days. We will remain long, aiming for a break of resistance in the 1.2948-1.3018 area to open the way for a continuation of the long-term uptrend.
For more resources on the USDCAD, please visit the DailyFX Canadian Dollar Currency Room.
AUD/USD
Strategy: Flat
Weekly Profit / Loss: +578 pips
We originally sold AUDUSD at 0.7079. Last week, the pair rallied to close above the upper boundary of a right triangle formation that had contained prices since early January, prompting us to exit the short position booking 578 pips in profit. Taking stock of the broader picture, the weekly chart sees the pair showing a bullish Breakaway candlestick pattern at the bottom of a range that has marked consolidation since October of last year. Although the broad bias remains bearish for the time being, a sizable corrective upswing may lie ahead. We will remain on the sidelines for the time being.
For more resources on the AUDUSD, please visit the DailyFX Australian Dollar Currency Room.
NZD/USD
Strategy: Flat
We proposed two weeks ago that NZDUSD was setting a Falling Wedge bullish reversal formation. This has subsequently been validated by a rally that has surpassed both the wedge top and significant resistance at 0.5047, a key axis that has acted as both support and resistance since early February. We now see that long term positioning mirrors the short term setup, with the weekly chart showing a clear Falling Wedge and positive divergence on the MACD oscillator. Further, NZDUSD is showing a star with bullish confirmation at support, hinting that break higher may be around the corner. We remain flat for now, waiting for final confirmation on a close above the wedge top.
For more resources on the NZDUSD, please visit the DailyFX New Zealand Dollar Currency Room.
To contact Ilya regarding this or other articles, please email him at ispivak@dailyfx.com
