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Week Ahead: Forex Markets Analysis – AUD/USD, GBP/JPY

August 9, 2014 by Richard Cox in Business with 0 Comments


Week Ahead: Forex Markets Analysis – AUD/USD, GBP/JPY

Dollar strength has been the dominant trend as we head into the second half of the summer, with the PowerShares DB US Dollar Index Bullish ETF (NYSE: UUP) starting the month at new highs.  These moves have been propelled largely by geopolitical concerns in areas like the Ukraine, Gaza, and Iraq.  Typically, the summer months tend to be market by slower price volatility, but geopolitical concerns like these can have the potential to influence short-term trends in illiquid markets.  Here, we look at the latest technical developments in the forex majors.

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AUD/USD – Australian Dollar vs. US Dollar

 

Critical Resistance:   0.9505

Critical Support:   0.9210

aud

(Chart Source:  CornerTrader)

AUD/USD Forex Strategy:  Wait for additional pushes lower before getting long again.  Buy at 0.9110, with stop losses below the 0.90 mark in AUD/USD.

The Aussie is starting to show slowing momentum and prices are now rolling over after hitting highs at 0.9505.   Further downside is now expected, given that the AUD failed at 78.6% Fibonacci retracement at 0.95.  Critical support can now be found at 0.92 but any approach of this level would create a head and shoulders pattern on the hourly charts, and a break of 0.92 could be defined as the neckline.  Daily RSI is approaching oversold territory, so bounces are still possible.  The data in these trends has also been confirmed by reports released by FXPips.

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GBP/JPY – British Pound vs. Japanese Yen

Critical Resistance:   1.7530

Critical Support:   1.6950

gbp

(Chart Source:  CornerTrader)

GBP/JPY Forex Strategy:  Stay with the positive trend but wait for better buying opportunities, after prices move into oversold territory.  Go long at 1.7050, with a stop loss below 169.50.  

The GBP/JPY is showing a strong uptrend, with long-term highs posted at 175.30  But we are seeing prices drop below the 100-day moving average and break the uptrend line that started back in February.  This suggests that the forex pair has further to fall, and the RSI still has more room to the downside before becoming oversold.  Strong support is not seen until we reach 1.6950, so it is prudent for forex traders to wait until price reach these areas before buying again.

 

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