*As at 22.00 Hrs BST on Sunday 12h November 2017
HOW TO USE:
Try cross-referencing the above 6 currencies: i.e take the strongest and the weakest and open the corresponding chart. So for example, if USD is the strongest (S1) and JPY is the Weakest (W1), open the USD/JPY chart on the daily timeframe and see if price action agrees.
You don’t have to stick to the No1 crosses either: There are 9 potential currency crosses here, so maybe pair the 2nd strongest (S2) with the 3rd weakest (W3) and see what the chart throws up.
THIS WEEK’S CHOICES, CHARTS, OPINIONS, CAVEATS & MORE…
NZD / USD Short (Weak 1 Vs Strong 1)
For 2 weeks now we’ve cited this pair short with a note last week around some profit taking. Sure enough, it bounced off 0.6850 support and retraced up to the 38% Fib line (almost to the pip !) as is typical in profit taking retracements.
We have some fairly robust data due out from the US this week, so we wait to see if the bears have what it takes to see off prior support and head lower.
I still maintain there to be substantial downside potential for this instrument but wish to see current support tested and broken before I take a position and commit my account.
GBP / AUD Long (Strong 1 Vs Weak 3)
I bring this chart to the table as we have an interesting intersection of 2 meaningful trend lines here and, as usual, a strong price reaction upon breakout.
This is the power of our Strength / Weakness analysis; it brings about an awareness of specific chart action that otherwise may remain hidden in amongst the noise of the market.
EUR / AUD Long
I will simply reiterate most of what I had to say last week:
Here we have a fascinating chart to play with. One of the best examples of a near 9 month ascending triangle I have seen in quite sometime – a near perfect rising trend line in play since late February capped by multiple tests of resistance at the 1.5230 handle and a fakeout (false breakout) to boot.
I see such a pattern as a showing upside potential and this is born out by the ascending triangle pattern being widely seen as a continuation pattern, effectively building pressure toward the upside.
Lets face it, this pattern cannot stay in play for much longer, something has to give. I’m widely know for stating the obvious in that price can only go in one of three directions, go Up, go Down or go sideways. In this case price has to either move to the upside breaching resistance, to the downside breaching rising trend line support, or sideways, again breaching rising trend line support to establish a trading range.
NB: Last week we saw price again test rising trend support and Friday’s bull bar was good and strong, however last weeks RBA rate statement did little to drive this pair in either direction so we again wait and watch price test it’s 1.5230 resistance level.
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