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Technical Weekly: EUR/USD Outside Week Follows Narrow Range Week

Technical Weekly: EUR/USD Outside Week Follows Narrow Range Week

2017-02-03 21:07:00
Jamie Saettele, CMT, Sr. Technical Strategist
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  • -EUR/USD outside week follows the narrow range week
  • Commodity currencies probe big zones
  • USD/ZAR breaks 5 and a half year trendline

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EUR/USD

Weekly

Technical Weekly: EUR/USD Outside Week Follows Narrow Range Week

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

Last was the smallest non-holiday weekly range since September 2012. This week was an outside week (although didn’t close on the highs). The current dynamic is the exact opposite of what happened in September 2012 (tiny weekly range and an outside week…circled on the chart). Price wise, EUR/USD is fighting against 1.0820/50, which was support in 2015 and 2016. It’s a big level but consider upside as long as above this week’s low due to the mentioned small range, outside week dynamic. If this week’s low is taken out then I’d still watch for support near 1.0462-1.0539 (2015 lows). Remember the weekly RSI comment – “the fact that the indicator has turned up from above 30 is a positive but pay attention to the 60 value for resistance.”

Check out the DailyFX Trading Guides and webinars for ideas and education.

GBP/USD

Weekly

Technical Weekly: EUR/USD Outside Week Follows Narrow Range Week

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

There is no change to the long term GBP/USD comments. “Cable has followed through on the weekly reversal and closed above the 13 week average. The high is at the November high and a long term parallel so it could take some time to work out the kinks before an extension higher. The long term cycle is the most intriguing of all. “Did the 96 month (8 year) cycle low count just nail a major GBP/USD low (cycle is in February but give this some wiggle room)?

AUD/USD

Weekly

Technical Weekly: EUR/USD Outside Week Follows Narrow Range Week

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

.7700-.7835 is going to be a battle for bulls. The zone is defined by long term parallels, upper end of the 2016 range, and underside of former trendline support. I think the level gives way but don’t know when (if you have an idea, please share). Remember, the relationship between the 2011 high and 2016 low is one reason why I’m treating everything since the 2016 high as consolidation within a new bull trend. “The .618 absolute retracement of the 2011 high at 1.1080 is .6847 (1.1080 x .618). The 2016 low is .6827.”

NZD/USD

Weekly

Technical Weekly: EUR/USD Outside Week Follows Narrow Range Week

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

Kiwi is similar to Aussie in that the broader trend is higher but the market faces resistance right now. There is a good deal of horizontal consideration for supply between .7327 (highest 52 week close) and .7485 (2016 high). Original channel resistance (line slope based on 2015 and 2016 lows) is up here too. The zone is bolstered by lows in 2011 and 2012 as well (see to the left of the chart). I don’t like being bullish into such a big zone.

USD/JPY

Weekly

Technical Weekly: EUR/USD Outside Week Follows Narrow Range Week

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

“Strength of the prior trend probably necessitates a more drawn out corrective process. In the event of a break, 109 would be in play.” I’m sticking with the ‘drawn out process’, meaning that USD/JPY is neither overly bullish nor bearish but rather range. The trendline / horizontal level above price and 110.67-111.90 range below price make for solid range barriers. Abandon ship below 110.25 though (11/22 low).

USD/CAD

Weekly

Technical Weekly: EUR/USD Outside Week Follows Narrow Range Week

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

USD/CAD continues to probe 1.3000 from above. Price traded under the figure 3 of the last 4 days but closed above each day. I’d like to say then that 1.3000 is important but even a close below would still face the mid-1.2800s. Broadly speaking, the rally from May 2016 is corrective so the bias is for impulsive weakness but don’t discount rallies against the trend as long as price is holding the parallels (dotted lines).

USD/CHF

Weekly

Technical Weekly: EUR/USD Outside Week Follows Narrow Range Week

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

For the 3rd year in a row, USD/CHF is trading at the 55 week average in early February. All this means is that price action has been dreadful for quite some time. The 6+ year trendline is close on log scale (.9850) but lower on arithmetic scale. The top side of former trendline resistance should also be watched for a response…it too is slightly lower. Previous comments are valid. “Broad upside potential is possible as long as price is above the 2011-2014 trendline. The trendline is near .9850 on log scale and just above .9700 on arithmetic. The topside of the wedge is worth knowing near 1.0450 (line off of 2012 and 2015 highs). Essentially, the wedge barriers are all I care about…all else is noise.”

Bonus Chart

USD/ZAR

Weekly

Technical Weekly: EUR/USD Outside Week Follows Narrow Range Week

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

USD/ZAR (South African Rand) has broken trendline support. I presented short USD/ZAR in December as a ‘top trading opportunity for 2017’. Check out the free report here.

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

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