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FX Price Action Setups in EUR/USD, GBP/USD, AUD/JPY and GBP/JPY

FX Price Action Setups in EUR/USD, GBP/USD, AUD/JPY and GBP/JPY

2019-05-07 19:45:00
James Stanley, Currency Strategist
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FX Price Action Setups in EUR/USD, GBP/USD, AUD/JPY and GBP/JPY

It’s been a peculiar start to the week, at least when considering prior 2019 trends. US equities continue to exhibit tendencies of a turn, and various themes of risk aversion continue to show across global markets. This includes strength in both Gold and the Yen to go along with weakness in the Euro and a non-directional display of digestion in the US Dollar. In this webinar, I looked across the landscape to dial in on price action setups across FX major pairs.

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S&P 500: Sellers Pounce After Fall Below Rising Wedge

Just last week, I asked if US stocks were nearing a turn. A few trading days later, and evidence continues to stack up that a pullback is in order, and perhaps a bit more. The big pivot here appeared around last week’s FOMC rate decision; and while not much was said, FOMC Chair Jerome Powell didn’t talk up the prospect of rate cuts. He said that the next move could be higher or lower without committing in either direction, and this was taken as a buffer to the market’s growing expectations for a cut at some point this year. Ahead of that rate decision, odds were over 65% for at least one cut in 2019. Less than a week later, and probabilities are now closer to 56.8%. Notably, US equities rallied last Friday to recover a large-portion of the FOMC-fueled losses in the index. But, this week hasn’t been so kind thus far, as sellers have remained aggressively on the ask.

At the open of this webinar, I pointed out a level that would soon come into play, and 90 minutes later, the Fibonacci level at 2868 is being tested through.

S&P 500 Four-Hour Price Chart

s&p 500 four hour price chart

Chart prepared by James Stanley

Yen Strength – Unfilled Gaps – Warning Signs

Going along with that theme of risk aversion has been the scenario of Yen-strength, which remains a visible theme across FX-pairs. The Yen gapped-higher to open this week, and this shows as gaps-down in pairs like EUR/JPY, USD/JPY and AUD/JPY. AUD/JPY has already filled that gap around yesterday’s RBA rate decision; but the remaining unfilled gap in both EUR/JPY and USD/JPY is of concern, as Yen strength has remained without so much as a pullback so far this week.

I discussed two very different ways of working with the above gaps. In EUR/JPY, I pointed out a key support level coming into play on the chart as it was happening, taken from the Fibonacci level around 123.10. A hold of support here opens the door for bullish reversals, with eventual targets tilted towards that gap, looking for it to fill before a bigger picture bearish wave may come back into play.

EUR/JPY Four-Hour Price Chart

eurjpy eur/jpy price chart

Chart prepared by James Stanley

On the other side of the matter, for those looking at continued risk aversion, the short-side of AUD/JPY could be of interest; looking for the downward movement to continue after yesterday’s RBA-fueled gap-fill in the pair. I had laid the groundwork for this setup in the Aussie technical forecast two weeks ago, and with the support zone around 77.50 being taken-out, the door can remain open for a run-down to the 75.00 area on the chart.

AUD/JPY Daily Price Chart

audjpy aud/jpy daily price chart

Chart prepared by James Stanley

In USD/JPY, directional plays could be more challenging. The item to watch appears to be which Fibonacci level will come back into play from the November 2017 – March 2018 major move. Each of the retracement levels from that study has had some pull with near-term price action in the pair so far this year; and just two weeks ago the 76.4% retracement helped to set the high in the pair. At 110.86, around this week’s high, is the 61.8% retracement of that major move. And on the underside of price action, 109.67 lurks as the 50% marker of that major move, last in play in late-March when it helped to set the low.

USD/JPY Eight-Hour Price Chart

usdjpy usd/jpy price chart

Chart prepared by James Stanley

GBP/JPY Nears Key Fibonacci Support

For those looking to fade Yen-strength, GBP/JPY may be of interest. The pair is closing in on a big support level around 143.79. This is the 38.2% retracement of the 2016-2018 major move in the pair, and this same price has come-in as support on four separate occasions over the past few months. And, of note, there is remaining unfilled-gap here, approximately 225 pips higher on the chart.

GBP/JPY Four-Hour Price Chart

gbpjpy gbp/jpy price chart

Chart prepared by James Stanley

Crude Oil Bounces from 60, But is the Bullish Trend Done?

I had looked into this setup last week, remarking that support at 61.58-61.87 no longer looked as attractive, instead steering the focus to a support zone a little lower that ran from 60-60.35. That zone came into play shortly after this week’s open, and this held as buyers posed a push back up to 62.84. Since then, however, that bullish theme has come unraveled and prices are sitting in the middle of the recent range. This draws away some attractiveness from another support test at 60.00.

Crude Oil Four-Hour Price Chart

crude oil four hour price chart

Chart prepared by James Stanley

EUR/USD: Is this It?

EUR/USD has been in varying forms of a range for almost six months now. And that range started to give way a couple of weeks ago but, to date, sellers haven’t been able to make much of a dent. The prior support zone that runs from 1.1187-1.1212 remains in-play and has helped to set resistance today. I had looked into the pair in this week’s FX Setups as one of the more attractive ways to work with themes of USD-strength.

EUR/USD Daily Price Chart

eur/usd eurusd four hour price chart

Chart prepared by James Stanley

GBP/USD Pulls Back to Higher-Low Support: Can Bulls Maintain?

On the other side of the US Dollar, GBP/USD retains some interest. This is driven by last week’s ‘Super Thursday’ rate decision at the Bank of England, when BoE Governor Mark Carney warned that faster rate hikes may be necessary: A decidedly hawkish tone in a global environment full of doves. As the US Dollar sold off on Friday, GBP/USD put in a noticeable topside breakout, rushing to fresh monthly highs. I looked into the pair in this week’s FX Setups, attempting to play a pullback. The first zone, running from 1.3087-1.3117, helped to set the lows yesterday. But, sellers remained persistent and prices pushed down to the ‘s2’ zone that runs from 1.3039-1.3053, and this has so far helped to hold the Tuesday lows. This keeps GBP/USD in a position of interest for continued USD-weakness.

GBP/USD Four-Hour Price Chart

gbpusd gbp/usd four hour price chart

Chart prepared by James Stanley

USD/CAD Tests Resistance Near Key Level of 1.3500

USD/CAD continues to display jagged price action but, of note, buyers are calming as price action remains near resistance at the 1.3500 figure. This can keep the prospect of reversals active in the pair, particularly for themes of USD-weakness.

USD/CAD Four-Hour Price Chart

usdcad usd/cad four hour price chart

Chart prepared by James Stanley

USD/CHF Holding Near Two-Year Highs

A similar backdrop exists here in USD/CHF in which reversals may be favored. The context is a bit different, however, as USD/CHF sits near two-year highs after a very aggressive bullish run. This can make the pair a bit less attractive for reversal potential than what might be seen in USD/CAD; and if we do get a washout in the US Dollar, in which the US currency pulls back to break through a series of near-term supports, bullish plays in USD/CHF may become interesting again; attempting to incorporate CHF weakness into strong-USD scenarios.

USD/CHF Weekly Price Chart

usdchf usd/chf price chart

Chart prepared by James Stanley

AUD/USD Attempts to Recover, Grasps for .7000 as Short-Term Support

AUD/USD finally tested below the .7000 big figure when prices gapped-down to start this week. But, an RBA rate decision last night helped the pair to further recover, bouncing back-above the psychological level and running towards the .7050 area on the chart that set last week’s swing-highs. Buyers pulled back, and at this point, price action appears to be attempting to set higher-low support off of the .7000 level. This can keep the door open for short-term bullish scenarios, looking for AUD/USD to move towards the .7100 level.

AUD/USD Two-Hour Price Chart

aud/usd audusd two hour price chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q4 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 an abundance 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

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

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