In this series we scale-back and take a look at the broader technical picture to gain a bit more perspective on where we are in trend. Here are the key levels that matter on the weekly charts for the USD/CAD, USD/JPY and GBP/CAD heading into the close of the month. Review this week’s Strategy Webinar for an in-depth breakdown of these setups and more.
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USD/CAD Weekly Price Chart
Notes: Is the Canadian Dollar finally poised to strengthen (USD/CAD lower)? Price turned from key confluence resistance last week at 1.3103/32, “where the 100% extension of the September advance and the 61.8% retracement of the 2017 decline converges on the upper median-line parallel.” The reversal came alongside a brief probe above 60 in weekly RSI and heading into the close of the month, the risk is lower while below this threshold.
Bottom Line: Price has turned from resistance and we’re looking for evidence that a more significant high is in place. From a trading standpoint, I’ll favor fading strength while below structural resistance – interim support rests with the 52-week moving average / basic slope support ~1.2820s with a break below 1.2686 needed to validate the reversal. A breach / weekly close above the upper parallel would expose a topside rally targeting the 2017 high-week close at 1.3647.
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USD/JPY Weekly Price Chart
Notes: The Japanese Yen may be poised for further strength (USD/JPY lower) after breaking below slope support (red) last week. Note that momentum does look a bit tired here and the possibility for a near-term recovery remains- that said, look for resistance ahead of last week’s high / the March open at 106.64/66.
Bottom line: Our outlook remains unchanged and we’ll favor, “fading strength sub-107.84 with a break lower targeting confluence support at 103.04/40 where the 100% extension and the 78.6% retracement converge on broader slope support (critical).”
USD/JPY IG Client Positioning
- A summary of IG Client Sentimentshows traders are net-long USDJPY- the ratio stands at +2.69 (72.9% of traders are long) –bearishreading
- Retail has remained net-long since Dec 29th; price has moved 6.9% lower since then
- Long positions are 0.1% lower than yesterday and 11.8% lower from last week
- Short positions are 12.3% lower than yesterday and 14.7% lower from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USDJPY prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger USDJPY-bearish contrarian trading bias.
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GBP/CAD Weekly Price Chart
Notes: Back in February we highlighted that GBP/CAD was “testing a key resistance zone at 1.7728-1.7854 where the 2017 high and the 38.2% retracement of the 2015 decline converge on the median-line of the 2016 ascending pitchfork (also note the Brexit weekly reversal close). The immediate advance is at risk heading into this region with a weekly close needed to mark resumption. Such a scenario targets the 200-week moving average at ~1.8020s backed by confluence resistance at 1.8343.”
Price is now testing confluence resistance at 1.8354 where the 50% retracement converges on both medium-term (red) and longer-term (blue) up-slope resistance. Momentum is still deep in overbought territory and while our broader focus remains higher, price remains at risk for a near-term pullback here before resumption.
Bottom line: GBP/CAD is testing up-trend resistance and leaves the immediate long-bias vulnerable near-term while below 1.8354. Interim support rests at 1.8040s backed by 1.7854 with our bullish invalidation at 1.7736– both regions of interest for exhaustion / long-entries IF reached.
Previous Weekly Technical Perspectives
— Written by Michael Boutros, Technical Currency Strategist with DailyFX
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