Strategic trade
Trade view / 16 October 2016 at 22:16 GMT

FX majors: Short-term chart formations emerging

Analyst / PIA First
United Kingdom
Background

Some very interesting patterns are emerging in FX majors this week. We are going to highlight the formations with target levels and prime entry. First, a look at the USD index

USD Index 

Daily: Still pushing higher. A full AB=CD formation would take the pair to the channel top at 99.75.

USD Index D
Source: Saxo Bank 

Intraday (six-hours): The mild dip lower was bought into and we closed near the weekly highs. The interesting fact here is that the 261.8% extension level (94.06-96.26) is located at 99.82, just above the AB=CD formation target. Next upside barrier (or target) is the triangle measured move at 98.44.

USD Index 6
 Source: Saxo Bank

EURUSD 

Intraday (four-hours): Broken out of the triangle formation to the downside. The measured move target is at 1.0880. Bespoke resistance and prime short entry at the start of the week is located at 1.0997.

EURUSD 4
 Source: Saxo Bank

GBPUSD 

Intraday (one-hour): Not the favoured USD pair (as we are bearish on EURGBP). Holding within a consolidating triangle formation. A break of support at 1.2171 should see a move down towards previous support at 1.2100.

GBPUSD 1
 Source: Saxo Bank

EURGBP 

Intraday (two-hours): We have broken out of the channel formation to the downside. A break of 0.8966 should see a move down towards the 261.8% extension level (from 0.9141-08966) of 0.8682 this week. We have bespoke support at 0.8630 but this could well move higher to link-in with aforementioned Fibonacci. 

EURGBP 2
 Source: Saxo Bank

USDCHF 

Intraday (two-hours): One to break the bullish dollar bias. Looks to be forming an Ending Wedge pattern. At the moment we have a lower high but really need to see a break of support at 0.9880-52 to confirm the move to the downside. We would then look to target 0.9821-27 and 0.9767. There is even scope for a move to 0.9732, depending on which wedge formation plays out. 

USDCHF 2
Source: Saxo Bank 

USDJPY

Intraday (four-hours): A bearish Outside Bar on the four-hour chart highlights a possible top in place for USDJPY. With the intraday rally also rejected on Friday we could be forming a bearish Head and Shoulders. Bespoke support is close to the neckline at 103.51-45, so this could be a formidable barrier. A break there and we look to 102.15 (measured move) this week.

USDJPY 4
 Source: Saxo Bank

USDCAD 

Intraday (four-hours): The weekly Ichimoku Cloud capped buying last week and we broke out of the wedge formation to the downside. The measured move target is at 1.3000. A break there and we could get a move towards the 261.8% extension level at 1.2858. Prime short entry would be a retest of the breakout at 1.3180 with a stop above bespoke resistance at 1.3200.

USDCAD 4
 Source: Saxo Bank

AUDUSD 

Intraday (four-hours): Volatile trading towards the end of the week. However, we did see a wedge breakout and, although selling was noted late on Friday, we look for dips to be bought. Bespoke support is located at 0.7580. With a stop placed back inside the wedge pattern (say at 0.7555) and a target level at 0.7690 (wedge target) this offers a good risk/reward set up in early trade this week. 

AUDUSD 4
 Source: Saxo Bank

EURJPY 

Intraday (four-hours): Thursday and Friday saw a period of consolidation with the daily chart posting little net change. This in turn formed a consolidating channel formation on the intraday chart. An AB=CD formation is seen at 112.89, close to the 78.6% pullback level of 112.96. This is the target area in early trade this week. Bespoke resistance is seen at 114.46.

EURJPY 4
Source: Saxo Bank. Create your own charts with SaxoTrader; click here to learn more



— Edited by Susan McDonald

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16 October
velj velj
Thanks Ian, much appreciated !
17 October
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
you are very welcome
17 October
Rofhiwa Thomoli Rofhiwa Thomoli
Ian, is it safe to play long for the day on EURGBP?
17 October
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
I wouldn't.... I think it is still corrective so would prefer to sell into rallies
17 October
Andrew Perkins Andrew Perkins
Hi Ian , I'm in EURJPY got in early with a 114.45 see what happens after 10am with the data coming out from the EU
17 October
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
Good luck Andrew
17 October
Andrew Perkins Andrew Perkins
i need it
17 October
Andrew Perkins Andrew Perkins
do you think 114.50 will be broken or hold out
17 October
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
We have a barrage of resistance between here (114.41) and 114.72. If we cant hold that last level then we could see 115.18. We are still bearish at the moment
17 October
Andrew Perkins Andrew Perkins
lots of rejection around 114.50/55
17 October
Andrew Perkins Andrew Perkins
so Ian just to check i have been listening and learning how to trade would you say its broken out of the wedge to the downside , on the hour chart correct me if this is wrong , in most case i am
17 October
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
do you have a picture of your wedge ?
17 October
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
I am still looking for this
17 October
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
30 minutes and it looks likely to stay in this range
17 October
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
Triangle ......
17 October
Andrew Perkins Andrew Perkins
Ta
17 October
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
an Ending Wedge needs trend lines in the same direction..... example here is USDCAD .... should be like a 'coiled spring' .... What we have here is a consolidating triangle.... it does have a bias to break lower but normally gives loads of false signals while it stays inside.
17 October
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
USDCAD Ending Wedge
17 October
Andrew Perkins Andrew Perkins
thanks Ian slow progress but we will get there LOL
17 October
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
no problem at all
17 October
grouev10 grouev10
there should be one more ABC up to finish the ending diagonal
17 October
HaythamSabry HaythamSabry
Hi Ian, what do you think about EURUSD, does your recommendation still stand? Thanks
17 October
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
Needs to hold 1.1008 or I have nothing until 1.1055 and 1.1072. Prefer to play Euro weakness through EURGBP
17 October
Andrew Perkins Andrew Perkins
Next resistance 114.00 take profit or let it roll over night, and we all been there checking through the night to see if it's changed lol
17 October
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
I can see no reason to close the short but that is your call.... sleep well ... lol
17 October
Andrew Perkins Andrew Perkins
AUDUSD 0.7700 top end of the channel and look for reversed downtrend on comments from meeting later
17 October
Andrew Perkins Andrew Perkins
I'm slowly coming out of the night time checker, hahaha why why do we do it nothing bloody happens, happy trading see you in the morning
17 October
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
LOl.... cheers Andrew... it is the last thing I look at (apart from the wife) before I go to sleep....
17 October
Andrew Perkins Andrew Perkins
So many jokes we could add but I'll keep it professional
17 October
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
superb... was thinking the same
18 October
Andrew Perkins Andrew Perkins
Should of closed last night is the AB CD trade still on?
18 October
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
bias is still bearish inside the triangle ..... I have resistance up to 114.64 and 114.77
18 October
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
EURJPY - Intraday - We look to Sell at 114.63 (stop at 115.03)

Posted Mixed Daily results for the last 4 days. This has resulted in a large symmetrical triangle formation being posted on the intraday chart. Trend line support is located at 114.09. Trend line resistance is located at 114.88. We have a 61.8% Fibonacci pullback level of 114.64 from 115.03 to 114.00. Bespoke resistance is located at 114.64. The AB=CD formation target is located at 114.70.
Our profit targets will be 114.10 and 113.00

Resistance: 114.64 / 114.77 / 114.88
Support: 114.37 / 114.10 / 112.90

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