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Technical Weekly: GBP/USD - Setting the Table for Cable

Technical Weekly: GBP/USD - Setting the Table for Cable

2017-03-31 20:30:00
Jamie Saettele, CMT, Sr. Technical Strategist
Share:
  • GBP/USD ends consecutive quarter streak
  • AUD/USD about to be let out of the cage?
  • USD/JPY – huge level lines up in April

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EUR/USD

Monthly (LOG)

Technical Weekly: GBP/USD - Setting the Table for Cable

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).” Not much of anything has changed for EUR/USD on the long term charts. The downward sloping parallel near 1.1150 remains resistance as well as the trigger line for a major advance. A bearish outside week formed this week but a quarterly key reversal also formed in Q1 (new low and close above prior close).

GBP/USD

Quarterly (LOG)

Technical Weekly: GBP/USD - Setting the Table for Cable

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

Previously; ‘the bullish outside week (2 weeks ago) argues for the bullish outcome. The bottoming pattern would trigger above 1.2700.” With Q1 in the books, we’re looking at a GBP/USD quarterly chart today. For the 3rd time in history, a string of 6 consecutive down quarters has ended. The prior to instances were major lows but also resolved with clean quarterly reversal candles. Q1 just carved an inside bar. Regardless, add this to the list of reasons to think that the table is set for Cable.

AUD/USD

Monthly

Technical Weekly: GBP/USD - Setting the Table for Cable

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

AUD/USD has got to do something soon, right? Trending moves have developed from this region over the last few decades. The 1997 breakdown and 2006 breakout took place after consolidations that resolved near the current market price. The trending moves also commenced following reactions at the 12 month average, which was just support in March. Previously; “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) (described in previous articles).”

NZD/USD

Quarterly

Technical Weekly: GBP/USD - Setting the Table for Cable

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

I’m still not sure what to think with NZD/USD. 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. The quarterly chart highlights the importance of the long term median line as a point of reference. Basically, above is bullish and below is bearish. Kiwi has traded around the line for the last 4 quarters which has engendered a great deal of indecision with respect to direction. There are times to make a market call. This isn’t one of them.

USD/JPY

Weekly

Technical Weekly: GBP/USD - Setting the Table for Cable

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

A major USD/JPY level could be met in April. The 52 week average (support and resistance for years) is near 108.30 and the 50% retracement of the decline is at 108.81 (the 1991 high was a 50% retracement of the 1990 decline by the way). The decline from the January high would consist of 2 equal legs at 108.49. This zone (108.30/81) intersects with the developing channel from the January high in mid-April. The channel is important because if the decline from January is corrective then price shouldn’t trade below the lower channel boundary for any extended length of time.

USD/CAD

Weekly

Technical Weekly: GBP/USD - Setting the Table for Cable

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

The USD/CAD rally from May 2016 is corrective so the bias is for impulsive weakness but the proximity of a long term parallel to the December high increases risk of a bull trap on a push through the horizontal level (failed breakout). However, the March high is a few ticks below the 52 week closing high so it’s possible that USD/CAD is ready for its next leg lower. Weekly RSI has been failing near 40 since late 2016 which is bearish behavior.

USD/CHF

Quarterly (LOG)

Technical Weekly: GBP/USD - Setting the Table for Cable

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

An important behavior change took place in Q4 as USD/CHF broke through a parallel that had been resistance for over a decade. However, the lack of follow through in Q1 is reason enough to question whether the breakout will end up as a trap. Viewed in this context, continue to pay attention to the trendline that 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. The line is just below .9800.

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