Technical Overview On The Forex Majors Before The Show

As we wrote in our post “What is to be Expected Next Week for the Forex Market?” this week’s economic calendar will be more crowded starting with Tuesday. Today the most important data came from Japan. It’s GDP rise only 0.6%, despite the expectations of 0.9%.

USDJPY has consolidated between 96.00 and 97.00 after a falling 4.16% from almost 100.00. The drop broke the rejection line of the down trend and started to draw a rectangle. From the current price action the higher probability is on the down side. A 240 minutes candle close under 96.00 could trigger another drop which will target the 94.00 level.

A recovery of the US dollar would mean a breakout above the 97.00 level. If this will occur we should look also for a close, to have a certain confirmation. On this scenario, the upper target sits around 98.50.

Chart: USDJPY, H4

Next is GBPUSD. This currency pair had an interesting evolution during the past moves. The up move was not straight but the price managed to get back to 1.5600. Here it has found a pretty good supply enforced by the round level and a down trend’s line.

Looking at the price action from January 2013 we will observe a consolidation that resembles pretty much with a Descending Triangle. This pattern would be confirmed only by a breakout under its base line or above the upper line. At the current moment the most probable would be a break above the upper line. If the price falls under 1.54 then we should look for a target around the demand area at 1.4840.

Chart: GBPUSD, Daily

A good technical image for AUDUSD would give us the 240 minutes time frame. Here we spot two converging lines that were respected by the fall of the price. On Friday, the trend line was broken, but because the price did not go too far, it was quickly retested today.

At this point we can say that the Australian dollar it is at a cross road. Even though it broke an important line, a fall back under it could signal a false breakout, which will end up with a drop. If the US dollar will not strengthen during the next days we should see a break above the 0.9215, the local resistance, and by the end of the week a retest of the demand/supply area from 0.9300.

Chart: AUDUSD, H4

And we got to the most traded currency pair in nowadays, EURUSD. For the past month the single European currency has gained 5%. The rally seems to have stopped for the moment at 1.3400. The price was bounced back to 1.3300. At this point EURUSD is on thin line. A daily close under 1.33 could start a bigger corrective move, targeting 1.3200 or even lower.

On the other hand if the price will rally back to 1.34, the probability for a breakout from under this level will be even higher.

The trend is up as long as there are no clear reversal signals, but do not forget that the evolution of the US dollar is very sensible to the economic news published for the United States and especially those from the labor market. The better the news, the close Fed will get to tapering and shutting down the Quantitative Easing program.

Chart: EURUSD, Daily