Weekly Price Action Trading Outlook for February 4th to February 8th 2013
EURUSD – Euro/dollar up trend remains firmly intact
The EURUSD continued to move higher last week as the up trend remained firmly in place. Note, on Friday the market pushed significantly higher but then backed off the highs quite a bit into the New York close, forming a long upper tail on the daily bar. This indicates there was some profit taking into the week’s close and also that the market may be ripe for a counter-trend rotation this coming week. If we get that rotation lower this week, we will watch support between the 8 and 21 day EMAs closely for price action buy signals to buy into this up-trending market. The key support level to watch is seen near 1.3410.
GBPUSD – Sterling/dollar sitting at important support level
The GBPUSD put in a pretty volatile week last week as we can see on the weekly chart below. The market made a strong move higher after finding support near 1.5675; moving to a high of 1.5877 before reversing sharply. The market ended the week lower, just above 1.5676 support to close at 1.5695. Clearly, there’s a downtrend in this market and rotations back to resistance are being met with strong selling pressure. This week, support near 1.5675 will be critical, as we can see in the weekly chart below this support has been very important in the recent past, so whether or not the market can “hold the line” at this level will determine whether it rotates higher back towards resistance, or continues its descent. Traders should keep a close eye on this support near 1.5675 at the start of this week, a strong reversal / buy signal there could signal a move higher, whereas a close below that support would open the door for more losses.
NZDUSD – Kiwi/dollar threatening to break above key long-term resistance
In the weekly chart below, we can see that last week the market closed just below the long-term key resistance near 0.8475. Price has been contained under this level since September of 2011, so if price can close above it in the coming days it will be a pretty strong signal. This level will be in play this coming week and traders should keep a close eye on the price action near 0.8475 to see if the market can break and close above it or if it forms a reversal or
false break sell signal near it.
EURJPY – Euro/yen continues plowing higher
The EURJPY up trend continued last week, as did the up trends in the USDJPY and other major yen pairs. Note the recent pin bar setups that have formed in the EURJPY from short-term support; both pins have led to large moves as the trend resumed. The pin that formed on Tuesday was discussed in our members’ forum and some of our members caught it for a nice trade into the end of the week. We should note that smaller
pin bar reversals like these can be harder to trade in a market that is not trending as strong as these current Japanese Yen pairs are. However, as we can see below, in strong trends they due tend to provide low-risk / high-reward entry signals into the market. Traders can continue to watch for price action buy signals in these Yen trends this week and until the trends clearly start to change we should trade with them; the trend is your friend.
