Analyzing the Technical Signals in EURAUD and EURJPY

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GBP FX Update

To recap, we remained on hold as the Foreign Exchange (Forex) market opened following the holidays as trading was still unavailable with all brokers. The Italian Parliament has been dissolved, general elections are expected to take place in March, 2018.

Following the opening of global markets we have noted key technical patterns that may suggest the upcoming trend for several currency pairs. For the benefit of new traders that recently joined us we have been expecting significant gains in GBP for some time and expect GBP strength to continue throughout 2018.

We are still monitoring the potential bearish flag in GBPUSD monthly chart but other GBP pairs and crosses suggest the gains may continue. The most obvious trigger are the brexit negotiations but there may be many other scenarios that could lift GBP higher.

The gains that were seen in today’s session across GBP pairs and crosses were triggered by reports the UK Prime Minister may choose Boris Johnson to lead the brexit negotiations with the EU.

EURJPY Signal Strategy

We have been monitoring EURJPY for some time as we became well aware of the right price range the currency pair was held in. The recent weekly close above 134.20 may suggest further gains are in store. We cannot enter EURJPY until a re-test of 134.20 takes place. By the book we do not require a weekly close but it is preferred.

EURJPY Weekly Chart

Please click on the chart to enlarge:

Analyzing the Technical Signals in EURAUD and EURJPY

EURJPY Weekly Chart 02/01/18

Although initiating a long trade at current levels may suggest around +100 pips potential drawdown, which is tolerable, it is a fairly high price to initiate a long trade. As the potential target is unexceptional we will wait for a lower price. In an event EURJPY extends its gains without correcting lower we are likely to dismiss the entry.

GBPJPY Weekly Chart

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Analyzing the Technical Signals in EURAUD and EURJPY

GBPJPY Weekly Chart 02/01/17

GBPJPY is in a very similar position to EURJPY. It will however require a weekly close above 152.40 to suggest further gains are in store. We prefer GBP although we should state that from a technical angle both EURJPY and GBPJPY are fairly decent entries.

EURAUD Signal Strategy

In November (monthly close) 2017 we have noted a long monthly entry in AUDUSD. We dismissed the potential entry as we did not wish to roll any trades over Christmas. Since AUDUSD has extended its gains we cannot opt for the currency pair at current levels.

We have however noted a potential entry in EURAUD.

EURAUD Daily Chart

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Analyzing the Technical Signals in EURAUD and EURJPY

EURAUD Daily Chart 02/01/18

EURAUD is in a downtrend based on the daily chart at the time of this writing. We require another leg higher in order consider a short trade in the cross. The signal may only be provided following a daily close at the market region (diagonal resistance). It is possible an entry may be provided on Wednesday, we will keep monitoring Euro Aussie.

It is worth noting as opposed to AUD, the New Zealand Dollar (NZD) trend is unclear. We are noting some indications for NZD weakness but it is currently insufficient to translate into a short signal.

 We are aware of reports North Korea may be preparing for another missile test, it is unlikely to affect any of the entries we presented. The crisis between Catalonia and Spain has yet to come to an end but its impact on global markets is minimal at the time of this writing.

EURJPY Trade Alert

Please click on the chart to enlarge:

Analyzing the Technical Signals in EURAUD and EURJPY

EURJPY Weekly Chart 03/01/17

EURJPY long at market price (ask 135.05)
Take profit: 137.80
Protective stop: 133.75
Risk Ratio (RR): 1 : 2.2 (approx.)
Estimated duration: 20 days (approx.)

Price range: Relevant as long as the price is below 135.30

Note: We are not pleased with EURJPY most recent gains as it widened the protective stop and increased the odds for some drawdown but the entry may still be sufficient. The potential drawdown is a re-test of 134.20. We have given ourselves more distance form the market in an event of a whipsaw reaction to the FOMC minutes.

If timed correctly EURJPY is expected to correct higher within the next 24 hours. Should we incur a re-test of 134.20, corrective gains may only begin following the weekly close.

In an event we have minimal distance from the market prior to the US Non-Farm Payrolls on Friday we may be forced to adjust the protective stop due to the spread widening.

04/01/18 UPDATE: EURJPY is trading at 135.81 at the time of this writing, we are closing 20% of the long trade at market price.

04/01/18 UPDATE II: The potential entry in USDCHF is developing, however, are concerned the gains in USDCHF may be related to CPI that us due tomorrow for the euro zone. We are still debating whether to opt for USDCHF but due to the potential long entry we cannot rule out EURJPY retracing lower on Friday before correcting higher the following week.

Please click on the chart to enlarge:

EURJPY Trading Signal 04/01/18

EURJPY Weekly Chart 04/01/18

This was a very tough decision to make, we decided to close EURJPY long trade at market price (136.25). Should it retrace lower (preferably to 135.20) we will consider re-entering on Sunday.


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Analyzing the Technical Signals in EURAUD and EURJPY

Analyzing the Technical Signals in EURAUD and EURJPY

Last Updated on January 7, 2018