British Pound and Japanese Yen Highlight Current Trading Ideas

DailyFX

The USDOLLAR took a hit this week, trading to its lowest level since 6/19 (FOMC). Aside from the psychological and volume impact that the 6/19 close has on the market, the level is defined by a line that extends off of the December 2012 and June 2013 lows.

Continue to monitor the US equity and Treasury markets. Last week’s report covered what may be going on in those markets. Moves in stocks/bonds this week were nothing to write about (not yet at least)…so I won’t! Focus this week is on the US Dollar, specifically GBPUSD and USDJPY. Additional short term trading levels and ideas were covered in Friday’s DailyFX PLUS Webinar (archived under JamieTrading08092013).

USDOLLAR

Daily

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British_Pound_and_Japanese_Yen_Highlight_Current_Trading_Ideas_body_usdollar.png, British Pound and Japanese Yen Highlight Current Trading Ideas

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

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The USDOLLAR declined for a 6th consecutive day and continues to trade at the line that extends off of the December 2012 and June 2013 lows. The most recent 6 day decline (consecutive) was over 2 years ago (a 7 day decline ended on 12/31/2010). In other words, we haven’t seen a market like this since the 2011 low. Failure to hold nearby levels opens up a run on the March and April highs at 10577/86 (circled above).

GBPUSD

Weekly

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British_Pound_and_Japanese_Yen_Highlight_Current_Trading_Ideas_body_gbpusd.png, British Pound and Japanese Yen Highlight Current Trading Ideas

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

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FOREXAnalysis: The recent move doesn’t do anything to change the long term implications from the 4 year triangle break that occurred in February. The line that extends off of the January and June highs is at the market. If price were to trade through the June high (1.5750), then the line that extends off of the 2007 and 2013 highs would come into play near 1.5800. 1.5600 (May top and large volume area from 6/6 close) is a big level and is reinforced by parallel channel resistance over the next several days. Parallel channels have worked well in estimating support resistance at multiple degrees of trend in recent years.

FOREX Trading Strategy: Inside day today at resistance (1.5550-1.5600) is a top warning. A reversal from 1.5600 would be something worth investigating for a position.

GBPUSD

Daily

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British_Pound_and_Japanese_Yen_Highlight_Current_Trading_Ideas_body_gbpusd_1.png, British Pound and Japanese Yen Highlight Current Trading Ideas

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

Interested in automated trading with Mirror Trader?

USDJPY

Daily

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British_Pound_and_Japanese_Yen_Highlight_Current_Trading_Ideas_body_usdjpy.png, British Pound and Japanese Yen Highlight Current Trading Ideas

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

Interested in automated trading with Mirror Trader?

FOREXAnalysis: The USDJPY found support at the 6/14-6/18 resistance area this week and formed a small range key reversal on Thursday. 95.35 (78.6% of rally from June low, 61.8% extension of decline from the top when extended from the July top and close of the low day in June) remains a potentially significant support price if reached. If trading USDJPY, it helps to have a sense for Nikkei support/resistance. Nikkei 12700-12850 is an area to watch for near term support.

FOREX Trading Strategy: Will examine the short term picture as it develops next week but looking for a low.

USDZAR

Daily

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British_Pound_and_Japanese_Yen_Highlight_Current_Trading_Ideas_body_usdzar.png, British Pound and Japanese Yen Highlight Current Trading Ideas

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

Interested in automated trading with Mirror Trader?

FOREXAnalysis: “USDZAR has pulled back slowly over the last 6 weeks to test a former upward sloping resistance line. A large range key reversal unfolded on Wednesday after price dipped just under the line. The market response is promising. The daily RSI dip below 40 is characteristic of a market attempting to bottom within a larger bull trend.”

FOREX Trading Strategy: Price spiked below 9.78 today before reversing. A higher low may be in place.

--- Written by Jamie Saettele, CMT, Senior Technical Strategist for DailyFX.com

To contact Jamie e-mail jsaettele@dailyfx.com. Follow him on Twitter @JamieSaettele

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Jamie is the author of Sentiment in the Forex Market.

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