The focus for risk isn’t the U.S. dollar (USD/JPY) (though JPY grabs the headlines) but euro/J...
Currency Majors Picking up the Tone Once Again
01/05/2016 9:00 am EST
Though the Japanese yen and the Aussie dollar have started 2016 with a bang, Anna Coulling of AnnaCoulling.com takes to the charts for a technical look at how—for other currency majors—it’s been a case of picking up where they left off in 2015.
Whilst the Japanese yen and the Aussie dollar have started 2016 with a bang, for other currency majors it’s been a case of picking up where they left off in 2015, and none more so than the British pound, which continues to remain under pressure having finally breached the psychological 1.5050 level in mid-December. This is what I wrote at the time:
‘Moving to the British pound and the 6B futures contract, it was the ECB who provided the volatility, with Thursday’s wide spread up candle triggering the volatility indicator as the price action moved outside the average true range in this time frame, an unusual occurrence and one which laid the foundations for a trap, with the pair returning to the longer-term bearish trend once the dust had settled and now moving to test the 1.5000 region in early trading. With the low of Thursday’s candle now in place in the 1.4900 region, a return to test this area now looks increasingly likely, and should this be breached, the way will then be open for a deeper move to the 1.4600 last seen in April.’
…and with the 1.4900 now firmly breached and with a high volume node also now in place at this level, the longer-term outlook for the GBP/USD continues to remain bearish. In early trading Monday, the pair have attempted to rally to test the 1.4800, but once again look weak with a move through the low volume node at 1.4700 now looking increasingly likely.
The Canadian dollar on the 6C is following much the same pattern as the pound, with bearish sentiment continuing to remain firmly in play, with resistance now building in the 0.7230 region. Volume in the price waterfall of mid-December were heavy and confirming the selling pressure, with the volume point of control and sustained resistance in the 0.7450 – 0.7500 area, which too is adding further weight to the move lower, with the combined effects of a slump in oil prices and sustained US dollar strength completing this potent mix. Any move through the floor of current potential support in the 0.7150 region will then open the way for a further leg down, but much will depend on crude oil with Iran now in focus.
Finally, to the single currency which continues to remain range bound and trading within the spread of the volatility candle of early December, with the VPOC now perched in the 1.0950 region. The immediate levels of significance are at 1.0800 below where a low volume node awaits, and if this breached, then we can expect to see a further decline for the EUR/USD and a move to test the support platform now in place at 1.0600 during the early part of the year.
By Anna Coulling, Professional Trader & Blogger, AnnaCoulling.com
Related Articles on CURRENCIES
As I talk to traders from all over the world, the same questions keep coming up: What can I do to ma...
Uncertainty drives investment doubts and drags down prices. For risk of deflation, look no further t...
The usual Monday rules apply. The U.S. markets look sleepy with the spring ahead time change leaving...