We earlier noted the key economic release to watch out for next week (Here). Let’s know turn our attention to technical analysis and 3 FX pairs that could well be worth keeping an eye on next time out:
USDJPY
The USDJPY endured a bad week with the souring of risk sentiment seeing this pair trade down to its lowest level in two months. There’s a potential cluster of support nearby however with the market currently toying with a falling trendline from last December’s peak. A move back below this trendline would be a bearish development and quite possible see a retest of the key swing low of 108.12. Alternatively if the bulls can defend this region and push the price back above the 109.30 level then a recovery could take place, with the broad range of 108-115 that has defined this market for much of the year to date maintained.
Possible support: 108.12, 107.45, 105.20
Possible resistance: 111.04, 112.45, 114.35
EURAUD
This pair has broken above a falling trendline from the high seen at the start of June and could now be set to resume the prevailing uptrend. The market has rallied strongly since the low seen at the start of February and if it can take out the previous high of 1.5057 overhead then the year-to-date peak at 1.5236 will look increasingly vulnerable. On the other hand a failure to climb from here would lead to a retest of 1.4845 and if this level fails to hold as support then the confluence of the rising trendline and the previous swing low of 1.4640 become key.
Possible support: 1.4845, 1.4640, 1.4475
Possible resistance: 1.5057, 1.5236, 1.5500
GBPCAD
There’s been signs of a possible bottom forming in this pair after a prolonged decline since the start of May. A potential inverse head and shoulders setup could be forming with the head coming in at 1.6237. The latest dip, with a higher low, could be seen to be the second shoulder and a break through the neckline at 1.6620 would trigger an entry signal. The target for this setup, from a textbook point of view would be 1.7003 – taken as the distance from the head to the neckline above the neckline (1.6620 + 0.0383 = 1.7003). A failure to make a clean break above the neckline would keep the market under pressure and see any attempted rallies fizzle out.
Possible support: 1.6415, 1.6237, 1.6000
Possible resistance: 1.6620, 1.7003, 1.7230