Today we are going to look at what is happening on the six major forex pairs to see where they have been and where they may be headed. The goal is to get a sense for the direction that things may be going in this upcoming week. Although there is not guarantee that the price will do what we think, by looking at the current momentum we can get an idea for where the trend may push it.
We will be begin by looking at the daily chart of the EURUSD.
Notice that I have included some areas where there may be support or resistance located. These are area where the price may have a difficult time moving beyond. Currently with the EURUSD we are seeing a strong down trend from the chart high. This should indicate to us that the bears are in control and that our bias may be to look for shorting opportunities.
Next is the Daily chart of the AUDUSD.
You will also see on this chart a strong downward trend from the chart highs. In fact we may identify a double top on this chart which is a strong indication of a possible reversal. Currently this chart shows a very bearish trend. Even though we may think it can’t go any lower, we need to make sure we see evidence on the chart before going long.
This is the Daily chart of the GBPUSD
With this chart we are seeing an even stronger bearish trend. This has shown a steep drop from the chart highs and one where the bears are in strong control. With a trend like this we need to see some strong evidence that the bulls have come back before we decide to take a long trade. This type of trend will help us as we identify shorting opportunities.
Now for the USDJPY.
Over the past 6 months this has been the strongest trending pair of the six we are looking at. Currently we are seeing a bit of a topping formation as the price action has taken a break for the strong movements. Any time there is an extreme move on a chart we need to take caution and look for signs that there may be some weakness forming. We don’t want to be buying at the top here so look for a pullback in order to take additional long positions.
Here is the USDCAD.
Although not as long of an uptrend as the USDJPY, this pair as exploded to the upside over the last month or so. Again, look for a settling of this move before getting too caught up in the bullish strength.
Last, but not least, the USDCHF.
This pair has been the most sideways over the longer term but very strong over the last 6 weeks. Watch for areas of resistance to come into play as it may be an area for reversal.
Regardless of the pair we are trading it is important to look at the daily charts to see the longer term momentum that is there. Currently, all these pairs have exhibited strong trend in either the up or down direction. Use these trends to help in your trade while at the same time be cautious of potential reversals. Make sure you are using proper risk management and are looking for your setup conditions to be met prior to entering your trades. Have a great week!