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Technical Weekly: GBP/USD Bullish Outside Week; Downtrend Over?

Technical Weekly: GBP/USD Bullish Outside Week; Downtrend Over?

2017-03-17 20:00:00
Jamie Saettele, CMT, Sr. Technical Strategist
Share:
  • GBP/USD Bullish Outside Week
  • AUD/USD breakout risk (again!)
  • USD/CHF – Pay attention to the trendline from 2011

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EUR/USD

Weekly (LOG)

Technical Weekly: GBP/USD Bullish Outside Week; Downtrend Over?

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

“Recall that a key reversal occurred in January. There is divergence with RSI (monthly and weekly) and the decline from 2008 channels. The described conditions suggest a major bottoming scenario but if a new low is made then pay attention to 1.0200 (channel line).” A move above 1.0828 would make a series of higher lows and highs (uptrend) from January. Focus would then shift to the parallel near 1.1150. RSI is testing its own resistance line so ideally EUR/USD decides its fate soon. You know I’m running out of things to look at when I start drawing trendlines on indicators!

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GBP/USD

Weekly

Technical Weekly: GBP/USD Bullish Outside Week; Downtrend Over?

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

I wrote last week that “the Cable question is, ‘double bottom or consolidation on the way to 1.1000?’ 1.1000 is the top side of the 1980-1992 trendline (not shown on this chart). Parallels from the 2014-2015 trendline continue to define GBP/USD support and resistance. Only strength above the parallel that was just resistance would indicate an important behavior change (relieve downside pressure) and trigger a double bottom with the October and January lows (target 1.3400-1.3500).” This week’s bullish outside week argues for the bullish outcome. Again, the bottoming pattern would trigger above 1.2700.

AUD/USD

Weekly

Technical Weekly: GBP/USD Bullish Outside Week; Downtrend Over?

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

AUD/USD is back above .7700, which has been the ceiling for close to a year (since the April high…the 52 week closing high is .7719). I was looking for the dip to extend to the October and December 2015 highs at .7385 but FOMC lifted Aussie back to range highs. A deeper setback is still possible but don’t be stubborn on a breakout because upside potential is significant as per the weekly shift in momentum (RSI). “Weekly RSI has peaked at/near 60 on every bounce since after the 2011 peak. RSI at the 2 most recent lows (January 2016 and January 2017) are near 40, which is a positive. In other words, the momentum profile has improved which increases risk of an upside break.”

NZD/USD

Weekly

Technical Weekly: GBP/USD Bullish Outside Week; Downtrend Over?

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

Kiwi’s response at .6900 (resistance in October and December 2015) is promising. Still, don’t forget about the 2015-2016 trendline in the event of another flush. Weekly RSI is the definition of range with the indicator peaking near 60 and bottoming near 40 over the last year. A lack of OB/OS conditions indicates a lack of trend. “Bigger picture, I’m not sure what to think. Is the rally from August 2015 countertrend or a new trend? The 2016 and YTD highs are at major resistance from the 2011 low and a double top target is still unmet at .5899. A break under the 2015-2016 trendline would suggest a good deal more downside. Until then, keep an open mind.”

USD/JPY

Weekly

Technical Weekly: GBP/USD Bullish Outside Week; Downtrend Over?

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

Preference remains for sideways trade. As noted last week, “there are a few reasons for wanting to fade strength and buy weakness (range trade), chief among them is the fact that the 13 week average is flat and price levels are well defined. Generally speaking, 115.50-116.00 has been important on both sides of the market since December 2014. As long as price is below the level, the zone is resistance.” The 13 week average has turned down but range is the name of the game unless USD/JPY breaks below 111.40 (May 2016 high and 11/28 low).

USD/CAD

Weekly

Technical Weekly: GBP/USD Bullish Outside Week; Downtrend Over?

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

“The rally from May 2016 is corrective so the bias is for impulsive weakness but I don’t like being bearish into support (parallels).” The USD/CAD rally highlights why it’s not a great idea to be bearish into such clean support. Naturally, focus is now on the resistance parallel which is above the December high. The proximity of that parallel to the horizontal high increases risk of a bull trap on a push through the December high (failed breakout). I’ll note that the high of this move so far is a few ticks below the 52 week closing high so it’s possible that the rally to 1.3535 was the re-test.

USD/CHF

Weekly

Technical Weekly: GBP/USD Bullish Outside Week; Downtrend Over?

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

“USD/CHF remains supported above the 55 week average but the rate has tended to pivot in the first half of March the last 4 years (see black circles). With Swissie rallying into this period, I’m keen on a top.” The first half of March does it again! Focus is towards the trendline that extends originates at the September 2011 low. The line has been support on every touch since 2015 (including the US election). A break below would be significant and shift focus to .90.

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