The week sure did start with a bang for USD pairs! Traders were faced with gaps in both bullish and bearish directions at the open. Bullish USD gaps on AUDUSD and USDCAD started to reverse and today and USD appears to be rather weak compared to the other major currencies out there.
So what does this tumultuous start to the week mean for me? I will be going about my business in the exact same way I do every week by looking to the best trends for any opportunities. One thing I will mention is that the fact that the market shrugged off some counter trend gaps to continue in the established trend direction - this could be a great signal for me and my trading style. I like to trade with the trend so this is a strong signal that the medium term trend could continue!
Let’s analyse four charts by beginning with AUDUSD:
Monday’s candle is large and bullish plus there is a cluster of the round number of 0.7700 and some old resistance which can act as support when retested. This can add a little more strength to the chart. From where AUDUSD is right now I would say the probabilities for a few days of bullish price action is high and I will be watching the lower time frames for any pullbacks to potentially trade.
It has some definite resistance up ahead around the 1.1460 level but, with that number still being a fair way off, price having pulled back into the buy zone, a bullish candle that has now been broken to the upside and a good uptrend in place, I would say EURUSD also looks likely for a continued move to the upside in the coming days.
Perhaps one of the longest and strongest trends against the USD is USDCAD. A clear series of lower lows and lower highs combined with the bearish candle on Monday in the sell zone has me excited! I am waiting until USDCAD moves to new lows, breaking 1.2750ish, before I look for trades to join this trend lower.
My final USD chart is USDCHF:
Once again, a good trend, bearish candle in the sell zone and a rejection of the round number of 0.9700 has me looking for short trades here. I will however be waiting for the break to the downside of Monday’s bearish candle before I move to the lower time frames looking for any opportunities.
As always, things can change so I will continue to monitor these four charts for any setups that match my trading strategy rules. Remember it is up to you as the trader to make your own decisions and to trade your plan. I hope you have a great trading week.