The trading week ahead is going to be decisive for a lot of currency pairs from the technical point of view, since we’re heading into the busiest autumn season, and August is always a preparation of the technical patterns before huge trend happen. So we need to watch the market momentum closely in order to understand and forecast the market players’ intentions.
The most volume-weighted currency pair shows continuous weak performance. An important technical support level has been breached. We used to show you the trading range for the EUR/USD with the bottom around 1.1600 and this bottom is out of play anymore. The recent green trend line used to work as the median, dividing the prices on to two different stages. Since the blue horizontal support line at 1.1600 has been breached, and we’ve seen the failed bullish attempt to get the prices back above it, both lines work as the resistances now. The next level of strong sell orders volume allocation is placed above the descending simple moving average with the period of 55 hours on the hourly chart below. There could be some slight divergence on the slow MACD indicator, but the impact might not last for a long time. So we will be watching the pair to bounce back up towards the resistance levels, where we will try to find attractive ranges to open new fresh short positions. Another confirmation could come from the fast RSI indicator. All we need is to watch the hourly closing prices around its’ middle level of 50%. Any failed bounce towards that level could give good entry signals.
The technical outlook for the British pound is almost the same as to the previous pair. The only difference is that the prices had a bearish breakout of the green descending channel, which is definitely a weakness factor. Moreover, GBP/USD closed the previous trading week below an important psychological level of $1.3000 per pound, which is also a big gain for bears. MACD indicator does not show any reversal signs so far, RSI fast oscillator is rather far from the oversold territory. These are two factors that show us rather good chances of the downtrend to resume in the week ahead. Any bounces towards the resistance lines (simple moving average and green trendline) have to be considered as entry points for fresh short positions with targets around 100-150 pips and a couple of days to huld such a position. We do no expect any sharp moves GBP/USD since we’re still in the summer thin trading conditions with comparatively low volume.
The 4-hours chart below has the same settings as we showed it last week. USD/JPY bulls had a try to change the current neutral technical patter last week, but they failed to hold the important level of 112.00, which used also to be the top of the Ichimoku Cloud. THe bears took the market in control after that as a normal reaction of the market, and the rates bounced down to 111.00 support. And what is the most important from the technical point of view, is the fact that the prices stayed inside the span. Ichimoku Cloud indicator was designed by Japanese traders, so it shows the efficiency especially for the pairs with Japanese Yen. When the prices are inside the span it always mean uncertainty of the market without any exact direction to go. The best trading strategy for USD/JPY in the upcoming week is to wait-and-see. We do not expect the pair to get out of the recent tight range from 111.00 to 112.00 unless there would a major shift in the fundamental side.
The British pound versus the Japanese Yen remains one of the weakes currency pairs recently. We have noticed good chances for GBP/JPY for further weakening in our previous weekly forecast. The technical assumptions that we’ve showed on the H4 chart became the reality and the pair slided towards 144.00 support on Thursday. This fact opens the road for bulls to test much more important technical support at 143.22, which is not a big distance to go for such a volatile pair. The Ichimoku Cloud is completely bearish with ll the lines in the right order to resume the downtrend in the nearest future. We do not see any reversal signs on the technical pattern, so the probability to test that support is huge for the upcoming week. In case if you missed the opportunity, you can still join the party with fresh short positions, but you need to wait for good intraday technical levels and short the pair on bullish bounces.
USD/CAD : Bearish.
Nothing changed in the Loonie’s technical picture as well. USD/CAD still looks bearish to us and here is why. The prices are still inside the descending green dotted channel. Bollinger Bands indicator with 21 as the period is bearish. The last four biggest bearish candels have formed a triangle which is the continuation bearish pattern. Any bounce towards the upper BB range has to be considered as the opportunity to sell USD/CAD with a modest targets of 80-100 pips. The only thing that can break this bearish technical structure, is a clear breakout of 1.3118 resistance with closing daily or H4 prices. But as long as we see this continuation pattern, the chances for further North movement are more likely.