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EUR/USD Possible 14 Month Bullish Base

EUR/USD Possible 14 Month Bullish Base

Jamie Saettele, CMT, Sr. Technical Strategist
  • EUR/USD bullish base since May 2015?
  • GBP/USD bullish monthly candle
  • USD/CAD fails near 55 week average again

--Subscribe to Jamie Saettele's distribution list in order to receive a free report to your inbox several times a week.

--For more analysis and trade setups (including current positions and the ‘watchlist’), visit SB Trade Desk

--Free trading tips

EUR/USD

Weekly

EUR/USD Possible 14 Month Bullish Base

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

High Frequency Trading Tools

-FXTW has noted recently that “EUR/USD has been trading sideways since March 2015. This is one of the longest sideways periods in history (as defined by the length of time between 52 week closing price extremes) and the eventual break will trigger a significant directional move. My contention has been that the move will be higher given the presence of the 31 year trendline. Strength above 1.1185 would suggest that the upside is viable. Until then, there is nothing bullish to work with on the near term charts but be aware of 1.0870/80 as a reaction level.” The outside week offers ‘something to work with’ on the bull side now. Price is back above the 55 week average as well, which proved important as resistance and support at several junctures over the last year. SSI has flipped to negative, which is viewed as a positive for price. An inverse head and shoulders pattern is visible from the May 2015 high and could launch a major advance. As always, define your risk points (read more about traits of successful traders here).

-For forecasts and 2016 opportunities, check out the DailyFX Trading Guides.

GBP/USD

Monthly

EUR/USD Possible 14 Month Bullish Base

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

-The gap to open trading post-Brexit is thus far of the breakaway variety but the July low is just pips below the 78.6% retracement of the 1985-2007 range. A trendline/channel confluence is also under price and the July candle sports a long lower wick, which indicates support. In other words, it’s possible that a major low has formed. Remember, there is a 96 month (8 year) cycle low count.

AUD/USD

Weekly

EUR/USD Possible 14 Month Bullish Base

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

-AUD/USD is approaching an important juncture defined by slope considerations and the pre-May rate cut high at .7719. This level may be resistance but a break above would leave Aussie in full blown bull camp with the focus on the May 2015 high at .8163 and eventually an .8700 handle.

NZD/USD

Weekly

EUR/USD Possible 14 Month Bullish Base

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

-NZD/USD has turned down from a long term parallel and major horizontal levels. I had been looking for .6900 (resistance in 2015) to provide support but Kiwi has turned up sharply before the level. The 13 week average provided support at the recent low. While not perfect, this average does tend to provide support (and resistance) during trends.

USD/JPY

Weekly

EUR/USD Possible 14 Month Bullish Base

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

-Recent updates have noted that “price has stabilized in the vicinity of the noted 2000 and 2014 lows but whether or not the last week is a pause or a change in trend is unanswerable right now. Strength above 105.40 is needed in order to suggest that the upside is again viable. Until then, the area around 95 (next historical inflection point and 61.8% of rally from 2011) looms as a magnet.” USD/JPY turned up sharply from the well-defined long term horizontal level so I’m inclined to look higher in the weeks and months ahead. The caveat here is that the 200 week average was resistance at the recovery high AFTER providing support in May. This dynamic has played out a number of times, most recently in December 2007, and given way to extended declines.

USD/CAD

Weekly

EUR/USD Possible 14 Month Bullish Base

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

-The most recent weekly comments noted that “the bullish engulfing candle from May is still there of course but the rally has failed at the 55 week average. FXTW pays attention to this because this average was support for the last 3 years. Former support just provided resistance so USD/CAD may be transitioning to a bearish phase.” USDCAD is broke higher from 4 months of sideways trade on a daily basis but not a weekly basis. In fact, the rally failed near the 55 week average again. As such, the daily breakout this week may be a ‘trap’.

USD/CHF

Weekly

EUR/USD Possible 14 Month Bullish Base

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

-Failed breakout attempts late in 2015 and early in 2016 warned of an eventual downside break. However, downside probes (April through June) have held a multi-year support line (back at that line again). The holding pattern that has persisted since March 2015 will eventually give way to the next trending phase towards either the low .80s or 1.16-1.17. I wrote last week that “I’m not smart enough to know which way the market will break and I’m not dumb enough to pretend to know. Trend developments are positive while above .9683.” The drastic outside week reversal and drop below .9683 casts a vote in favor of the downside.

Bonus Chart

USDOLLAR Index

Monthly

EUR/USD Possible 14 Month Bullish Base

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

-The USDOLLAR index carved a monthly key reversal. Resistance is well-defined from both horizontal levels and the parallel that extends off of the 2013 high. That line was support in May 2015, which increases the line’s ‘validity’. For more, watch this video.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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