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Trading Opportunities in Euro Crosses at Nearby Levels

By , Sr. Technical Strategist
27 September 2013 20:23 GMT
  • USDJPY enters breakout window on Monday
  • USDOLLAR observations similar to September 2012
  • Euro cross rates are set up for long term bullish resumption

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Jamie is the author of Sentiment in the Forex Market.

USD/JPY

Daily

Trading_Opportunities_in_Euro_Crosses_at_Nearby_Levels_body_usdjpy.png, Trading Opportunities in Euro Crosses at Nearby Levels

Chart Prepared by Jamie Saettele, CMT

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-USDJPY ends the week on the lows and below the trendline that originated from the August low. Weakness below 97.75, the 9/18 low and trendline that originates from the June low, would indicate bearish resolution from the 3 month triangle (from June). Holding above 97.75 and trading through 100.60 would indicate bullish resolution.

-The most reliable breakout candidates occur no sooner than 2/3rds and no later than 3/4ths of the way through the triangle. This window is Sep 30th to Oct 11th. The window begins on Monday.

-If price breaks down early next week, beware of support from the 8/28 low and 61.8% retracement of the advance from the June low at 96.70/80.

Trading Strategy: Am still long from 98.80 with a 97.75 stop. There is an AUDJPY short setup.

USDOLLAR

Weekly

Trading_Opportunities_in_Euro_Crosses_at_Nearby_Levels_body_usdollar.png, Trading Opportunities in Euro Crosses at Nearby Levels

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

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-Since the 2011 low, USDOLLAR has not dropped for more than 4 consecutive weeks. Price has dropped for 4 weeks.

-Last week’s decline after the Fed announced ‘no taper’ feels, looks, and smells like the QE3 announcement in September 2012. In both instances, daily RSI(21) dropped to nearly the exact same level and price formed an inside week the next week. Both declines even formed channels, albeit in different ways.

EUR/GBP

Weekly

Trading_Opportunities_in_Euro_Crosses_at_Nearby_Levels_body_eurgbp.png, Trading Opportunities in Euro Crosses at Nearby Levels

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

Automate trades with Mirror Trader

-EURGBP rallied in an impulsive manner from the July 2012 low after declining in a corrective manner for 3 and a half years.

-The rally from 7/23/12 to 2/25/13 took 155 trading days. 155 trading days from 2/25/13 is on Monday. In other words, the current sideways trend will equal the previous bull trend in time on Monday.

-Price has formed a slightly downward sloping parallel (and corrective) channel since the February high. Price has traded ‘around’ the line that extends off of the 2008 and 2011 highs. The multiple false breakouts may help inspire a real breakout.

Trading Strategy: Looking for a low on Monday or Tuesday.

EUR/NZD

Daily

Trading_Opportunities_in_Euro_Crosses_at_Nearby_Levels_body_eurnzd.png, Trading Opportunities in Euro Crosses at Nearby Levels

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

Automate trades with Mirror Trader

-An ending diagonal (wedge) formed from the March 2011 high to the August 2012 low. Diagonals are often fully retraced, therefore the objective is the origin of the diagonal at 1.9564.

-An inverse head(s) and shoulders may be forming since February 2012. The pattern is slightly upward sloping, making it especially (potentially) powerful (see a completed version on EURAUD below). Exceeding 1.7274 would complete the pattern. Incidentally, the measured objective would be just pips from the origin of the mentioned diagonal.

-Price has retraced slightly over half of the advance from the April low, finding low on Sep 19th. The decline into the 19th may actually complete a flat correction from the June high (a-b-c).

Trading Strategy: Looking for a low between 1.6150 and 1.6220 next week.

EUR/AUD

Daily

Trading_Opportunities_in_Euro_Crosses_at_Nearby_Levels_body_euraud.png, Trading Opportunities in Euro Crosses at Nearby Levels

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

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-EURAUD is a bit ahead of EURNZD, having completed an inverse head and shoulders pattern on the May breakout. Price exceeded the measured objective before pulling back from above 1.5000 to below 1.4200 and finding low on the Sep 18th.

-The average plotted is 63 days (roughly 3 months). When price broke down from consolidation in 2009, price spikes above this average indicated opportunities to align with the downtrend. Price has sharply rebounded after spiking below the same average, perhaps indicating an opportunity to align with the larger uptrend.

Trading Strategy: Looking for 1.4460/80 support in order to get long against 1.4380.

--- Written by Jamie Saettele, CMT, Senior Technical Strategist for DailyFX.com

To contact Jamie e-mail jsaettele@dailyfx.com. Follow him on Twitter @JamieSaettele

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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27 September 2013 20:23 GMT