The Week Ahead
Posted on 22. Jan, 2011 by Moderator in Forex Signals, How To, Random Noise, Uncategorized
Another week has passed and in spite of ending this week the first loss of all signals issued since the beginning of 2011, it has still be an exciting week with a lot of indecision in the market. However, we did end the week with the final push on EUR/USD closer towards the 1.37 level which will be a key area for a lot of traders. Now, with the break of recent highs, I assume we are looking at possible further upside on EUR/USD, and in general, probably a bit more downside to the dollar. Fundamentally speaking, I am a bit more indecisive at the moment. Sure the successful bond auctions is EUR strengthening, but besides from the recent disappointing retails sales I still think that dollar strength will be back in the picture within a fairly short period of time, all depending on future news releases obviously. With that being said, let´s take a look at some possible scenarios for the week ahead.
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EUR/USD ended the week at 1.3612, which is somewhat in the middle of no-man’s-land, at least from a technical perspective. Now obviously I am going to wait for the market to open up and see if we might have a gap to one side of the other, but I am definitely seeing the 1.3740 level as a likely level to be hit, before we see any kind of significant bounce. With the direction set for now, we need some kind of fundamental catalyst in order to look for a reversal, but this is not necessarily a scheduled event, but maybe more of a change in sentiment as we, throughout the week, have seen a lot of indecision on this pair. So basically I am looking to buy in on dips and clearly a drop back down to the 1.3380 level should hold fairly well as support so keep a close eye on this area. As always don’t jump in immediately but wait for momentum to fade, and some kind of reaction to the level in question before jumping in.
USD/CHF did give us a bit of downside throughout Friday and the 0.9450 level is where I will pay attention for a possible bounce (which would just around that tiny bit of trend line we got for now, if we continue straight down from here). I would not be surprise if we hit this level just around the same time where EUR/USD might line up just around the 1.3740 level. At a breach of the upper trend line, my bias would be changed for the time being, and I will change my focus to look for a possible long, and reaccess EUR/USD from a bullish to possible bearish setup.
On USD/JPY we still have somewhat of a flag formation although we are coming a bit too close to recent lows; anyhow, it´s still trading very nicely in a typical channel formation and at a break of the upper part of the channel I am looking for a possible long trade which potentially could set us up for a really favorable risk:reward trade.
Finally we have AUD/USD and this pair sure seems to be struggling more with the upside compare to EUR/USD, which is probably due to the recent RRR hike from China´s central bank along with the flood in Australia. Now again, we do have a bit of a technical setup here with lower highs and higher lows, and although it´s nothing close to perfect, I am still looking for a possible short at a breach of the lower trend line, which once again could set us up for a really favorable risk:reward trade.
Keep in mind guys, that the charts presented here are daily time frames so you want to make sure that you apply the risk stop strategy. Don’t enter a trade based on the daily time frame with a 20 pip stop; that will be a suicide mission. And as always, adjust your position size and play as safe as possible. I will do my best to keep you guys updated on how I plan to trade this in practical terms.
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5 Responses to “The Week Ahead”
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Great review for the week. I totally agree with you on the Eur/Usd I think this pair is very strong right now. The charts say north so that is what I am believing. In addition to good techincal readout the news with all of the bail out support explains that a lot of people want a strong Euro.
The only thing that could hinder the euro for now is the terrible economic conditions of many of the countries that use the Euro. If we keep seeing positive U.S. News that could change this move. But until then I say we are looking for the 1.3800 area.