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FX Price Action Setups in USD/JPY, AUD/USD and USD/CAD

The year started with fright, but the past month has seen quite the change-of-pace. Equity bulls have returned in the US and prices are bucking back up to fresh highs. Already, many are looking for the buy-the-dip to return with force, and given the Fed’s recent pivot, this can make sense. What hasn’t meshed with that return of the risk-on theme has been a seeming lack of volatility across the FX-space. The US Dollar has been caught in back-and-forth price action for the past four months, EUR/USD has shown a distaste for life above 1.1500 and even those previously clean trends in the Yen have come into question. In this webinar, I took a step back to look at price action setups across USD-related major pairs.

Forex Talking Points:

- If you’re looking to improve your trading approach, our Traits of Successful Traders research could help. This is based on research derived from actual results from real traders, and this is available to any trader completely free-of-charge.

- If you’re looking for a primer on the FX market, we can help. To get a ground-up explanation behind the Forex market, please click here to access our New to FX Trading Guide.

If you’d like to sign up for our webinars, we host an event on Tuesday and Thursday, each of which can be accessed from the below links:

Tuesday: Tuesday, 1PM ET

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US Dollar Back to 96.04 After Last Week’s Higher-Low

Price action appears significantly cleaner on a short-term basis as prices have been trading in a clear push of topside momentum since setting a higher-low last Wednesday. This has helped to bring DXY back to the 96.04 level, which is the 50% marker of the 2017-2018 sell-off in the currency. This can open the door to short-term bearish momentum strategies; but the longer-term setup is far less clear at current levels. A topside break above 96.47 can re-open the door for longer-term bullish strategies; a bearish break below 95.00 can re-open the door for longer-term bearish strategies.

US Dollar Eight-Hour Price Chart

us dollar usd four hour price chart

Chart prepared by James Stanley

EUR/USD Falls From Key Resistance as Longer-Term Directionality Still Lacking

A key component of that lack of trend in the US Dollar over the past few weeks has been a similar theme in the Euro. EUR/USD continues to find resistance around the big zone that’s been in-play for the past few months that runs from 1.1448-1.1500, save for a quick test above that fell-flat in the second week of January.

For traders looking at short-term strategies, there may be some workable medium in the market, looking for a re-test of the 1.1300 handle. However, much like the US Dollar above, those looking at longer-term strategies would likely want to take a step back and wait for prices to put in a directional move before looking to implement such a theme.

EUR/USD Daily Price Chart

eurusd daily price chart

Chart prepared by James Stanley

GBP/USD: Cable Corrects 38.2% of the January Advance

Perhaps surprising for the month of January was the development of a bullish trend in GBP/USD, and this came after a troubling move showed up to start the year with GBP/USD pushing down to a fresh 20-month low. Since then, however, bulls re-grabbed control to drive prices all the way back-up to the 1.3200 handle. This came despite continued messiness around Brexit and another leadership challenge on Theresa May’s PM spot.

I had looked at this level earlier today, as this is the 38.2% retracement of the January bullish move and, so far, this price has helped to hold short-term support. As shared in the webinar, there are potential for short-term setups on both sides of this market at the moment. Another support zone exists a bit deeper, running from 1.2828 up to 1.2850.

GBP/USD Four-Hour Price Chart

gbpusd gbp/usd four hour pridce chart

Chart prepared by James Stanley

USD/JPY Back to 110.00 as Recovery Sets In

Similar to the British Pound above, USD/JPY started the year with fireworks that have seemingly taken a back seat over the past four weeks. Prices in USD/JPY have recovered from the earlier-year ‘flash crash,’ and prices have run back-up to a key zone of resistance that runs from 109.67 up to 110.00. I had looked into this zone last month, and since then this area has held multiple topside advances despite continued persistence from buyers.

At this stage, USD/JPY has produced a price action setup similar to an ascending triangle, in which horizontal resistance is meshed up with a series of higher-lows. This opens the door to bullish biases, as the same motivation that’s helped to bring-in higher-lows may soon allow for a break above that horizontal level or zone of resistance.

USD/JPY Four-Hour Price Chart

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Chart prepared by James Stanley

USD/CAD: Setups on Both Sides

As discussed in the webinar, there appear to be potential for setups on either side of the pair at the moment. On the bullish side of the coin, reversal potential could be of interest after last week’s support test of the 1.3066 Fibonacci level. On the short-side of the matter, a hold of resistance around 1.3132 could keep the door open for bearish momentum strategies.

USD/CAD Four-Hour Price Chart

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Chart prepared by James Stanley

AUD/USD Bounce From Key Support After RBA

I discussed this one yesterday before RBA and then again this morning after the rate decision. Of particular interest is a support zone that’s been in-play in various ways over the past few months. This area runs from .7185-.7205, and this area helped to form this week’s swing-low. With bulls jumping in after last nights rate decision, the door may soon be re-opening to bullish strategies in the pair, particularly for those looking at ways to add-in short-side exposure in the USD.

AUD/USD Two-Hour Price Chart

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Chart prepared by James Stanley

NZD/USD Support Test: Can Bulls Hold .6870?

This is a similar scenario as above in the Aussie, with perhaps a bit less development. Prices in the pair pulled back to a key area on the chart that runs from .6870-.6877, and this has so far helped to hold the lows in the pair. This can keep the door open for bullish strategies in the pair, particularly for those looking at short-side strategies in the US Dollar.

NZD/USD Four-Hour Price Chart

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Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q1 have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers a plethora of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

--- Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX