Cryptocurrencies have been sliding lower over the last few trading sessions. Although, the price action is pretty slow so nothing has changed since yesterday. We will focus on forex in today’s midday brief, particularly on the USD/JPY and on the EUR/USD.
The JPY is tired today
Get Ready to Go Long on The USD/JPY
The USD/JPY has been in a downtrend for some time. It started reversing at the beginning of January and continued to slide down until it reached the long-term support area of 105.00-105.50.
The top of that support zone at 105.50 was broken two weeks ago and sellers could not push below the bottom of the zone at 105. Buyers pushed back above 105.50 and above 106. Sellers returned again and tried to break the 105.50 level early last week, but failed.
The 105.50 level held and was a sign of trend change. The price moved above the 50 SMA last week as we can see in looking at the H4 chart below.
The 50 SMA turned into support
Last night, sellers made another attempt to break this moving average but it held its ground and turned into support. When the price moves above a moving average and turns into support, it signifies a trend change.
Finally broke above the 20 SMA
From the daily USD/JPY chart above, notice that the 20 SMA (grey) provided resistance in the last two months during the downtrend. It pushed the price lower and provided resistance in the last two trading days as well.
Last night’s push higher took us above the 20 SMA, another sign of a trend change for this forex pair. Switching to the weekly chart, the price moved back above the 200 SMA at 106.10, several signs that point to a trend reversal.
I will wait for another pullback lower, probably to 106.00-50 as the daily chart is overbought. After checking the price action, we can open a long-term forex signal in this pair.
The Retrace Higher in AUD/USD Over Soon
We opened a long-term forex sell signal in mid-January at 0.7950s. We were 200 PIPs down with this signal and 200 PIPs in profit a couple of weeks later. This pair retraced higher, nearly 100 PIPs in profit, yet the retrace has run its course. The stochastic indicator on the daily chart is already overbought, including the pair.
You can see that this forex pair climbed to 0.7890 today. The area around 0.79 provided resistance before and during the climb.
Besides for that, the 50 SMA (yellow) is standing at that level, adding additional strength to this resistance zone. As we have seen quite often in the past, these retraces, up or down, usually end at a moving average when the stochastic becomes overbought or oversold.
The chart setup right now meets the criteria for a reversal down. A doji, a pin, or a hammer candlestick would be nice since these candlesticks are reversing signals and would further weaken the buyers. I have a feeling the next move will be down and strong.
The retrace up seems complete
Trades in Sight
- Bearish trend
- Price in favor of sellers
- 100 SMA providing resistance on the H1 chart
Buyers cannot push above 100 SMA
We opened a forex sell signal in the EUR/USD a while ago. The trend is down and buyers are not strong enough for a decent retrace higher. This pair traded in a range since last Thursday and is now at the top. The 100 SMA (green) is also providing resistance at the top, making the pair bearish.
The markets have been pretty quiet today apart from the Yen pairs. The US inflation report is scheduled to be released in about an hour which will definitely stir things up. We have been doing well in the last two days with forex signals. Hopefully, this will continue.