Currency Index Notes:
From last week’s analysis, we recommended to go long on NZDUSD, exit CADJPY longs and to go short on USDCAD. For the week, NZDUSD longs gained +0.4% and USDCAD is -0.53%
Australian Dollar Index:
- Last week, the Aussie closed bullish after a spinning bottom candlestick pattern. This shows that a retracement to 1.5344 is the next level the Aussie will head to
- From the daily charts, price managed to close above 1.5128 support level. We expect a dip down to this price point as the ideal set up to go long
- However, price action could simply continue its bullish momentum and rally towards the 1.5344 levels
Conclusion: Look for long positions on AUD
Canadian Dollar Index:
- Last week the Canadian dollar was weaker and the weekly candlestick shows a bearish close
- Switching to the daily charts, we notice a head fake to the upside before prices declined
- The fact that this reversal forms near the bottom of the larger bearish flag tells us that prices could fall further before rallying
- Expect a weaker continuation in the Canadian dollar with a dip back down to test the lower price channel
- Daily charts shows an inside bar formed during last week followed by Friday’s bearish close indicating weakness in the short term
Conclusion: Look for short positions on the CAD this week
Euro Index:
- Price has been trading mostly between the support and resistance levels
- Thursday’s price action on the daily charts shows a strong doji reversal pattern forming followed by Friday’s small bearish close
- These patterns indicate indecision and as such the Euro has still not made up its mind on direction
- On the weekly charts we notice last week also closing in a doji
Conclusion: Stay aside Euro currencies this week
Sterling Index:
- Last week closed with a doji and the appearance of this at the top is indicative of a possible indecision
- Although price remains supported above the 2.96 – 2.95 price zone, we can expect a decline down to this level from current 2.98 price point
- From the daily charts we notice a three bar reversal with a lower high on either ends after Thursday’s high
- So we suspect that a decline to test the support at 2.96 – 2.95 is very possible
Conclusion: Wait for the support to be tested to go long, or short GBP but not more for a day or two
Yen Index:
- Price continues to trade within the falling price channel but there seems to be a support formed near 60.94 levels
- Friday’s candlestick closed bullish, engulfing Thursday’s small bodied candlestick, indicating a possible upside move on the horizon
- From the weekly charts we notice two straight weeks of indecision after the bullish engulfing was formed three weeks ago
- Looking closer on the daily charts, price seems to form a bullish pennant pattern with a potential upside break out, which gives a target to the previously marked resistance level at 62.6 – 62.7 levels
Conclusion: Look for short positions in the Yen this week
Kiwi Dollar Index:
- A piercing line candlestick formation three weeks ago has resulted in a strong rally in the Kiwi Dollar Index
- Weekly candlesticks show price at dynamic resistance of the 52 week EMA
- An unfilled gap at 1.4419 looks ideal for a drop with also shows confluence with the trend line
- On the daily charts price action has been showing indecision so we expect a potential drop to the gap before rallying towards the eventual target of 1.4731
Conclusion: Look to short NZD for the first part of the week or go long when support is tested at 1.4419
US Dollar Index
- On the daily charts, price action has broken out from the rising wedge pattern with a small retest to the break out level + past resistance level at 1.9391
- Expect to see a decline this week down to 1.87 level
- There is the trend line which comes in as the first support so watch for some bounces from this trend line before the decline
- We expect another retracement to happen on breaking of the trend line
- From the weekly charts, last week closed with a lower high although prices were bullish.
Conclusion: Stay short on USD against stronger currencies
Prepared with LiteForex Currency indices
Ideal Currency Pairs to trade this week
- GBPUSD: Expect to see a decline and then a rally. We prefer to wait to buy the dips instead
- AUDUSD: Remain long on AUDUSD or look for long entries on retracements
- NZDUSD: Expect a dip before a rally
- AUDJPY: Take long positions but hold no later than a few days. Intraday longs preferred