Weekly Price Action Trading Outlook for February 18th to February 22nd 2013
EURUSD – Euro/dollar showing some rejection of support; looking for buy signal
The EURUSD showed rejection of support near 1.3300 last Thursday and Friday, indicating that buying interest is coming back into the market near current levels. We would prefer to see a more obvious buy signal form within that 1.3300 – 1.3260 key support zone highlighted on the chart below. We could see a brief move lower and then a false break of this support resulting in a pin bar reversalor perhaps a fakey buy signal. We will wait patiently for a signal here as this new trading week starts. A decisive close below 1.3260 would start to negate our bullish bias.
XAUUSD – Spot Gold sells-off, more downside possible
The Spot Gold market sold-off hard on Friday, breaking and closing below $1625.00 support to end the week around $1610.00. Thefakey trading strategy that we first discussed in our February 5th commentary has now provided a very large risk reward ratio for any traders who held on into Friday’s large move lower. This market is clearly in a sustained downtrend and so we are only considering the sell-side this week. Watch for price action sell signals from resistance up near $1625.00 – $1635.00 if the market retraces higher this week.
GBPUSD – Sterling/dollar; waiting for a price action signal from support or resistance
The GBPUSD moved significantly lower last week as the downtrend accelerated. We are considering two potential scenarios for this upcoming week. Scenario 1 is looking for a buy signal from support near 1.5390, 1.5270 or the “zone” of support in between those two levels. We can see both of those support levels were significant turning points last year and so if the market continues to sell-off into them we can logically expect a bounce to occur and thus should watch for price action buy signals to form there if we continue lower this week. Scenario 2 is to watch for a price action trading sell signal to occur from resistance if the market rotates higher this week. We are watching 1.5760 area as an important resistance to look for sell signals this week to trade back in-line with the downtrend.
USDJPY – Dollar/yen uptrend remains in place but market is at key weekly resistance
The USDJPY weekly chart below shows that over the last two weeks price has clearly rejected some long-term resistance up near 94.50 – 95.00. The trend is still up in this market but given that it’s showing rejection of this key resistance we could see a larger rotation lower soon. We can still look for a buy signal on the daily chart given that the trend is still up but if this market starts to sell-off we could see a large move lower. So, be patient and wait for an obvious buy signal from support before buying this market. Alternatively, we can consider a short entry this week if the market tries to push further up into the resistance between 94.50 and 95.00 and then forms a larger pin bar reversal or fakey signal there.
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