— DailyFX Quarterly Forecasts have been updated for Q2, and are available directly from the following link: DailyFX Trading Guides, Q2 Forecasts.
— For trading ideas, please check out our Trading Guides. And if you’re looking for something more interactive in nature, please check out our DailyFX Live webinars.
To receive James Stanley’s Analysis directly via email, please sign up here.
Next week’s economic calendar is noticeably light on US issues, as we have but one high-impact release out of the United States. That’s retail sales figures, and that will be released on Monday morning ahead of the US equity market open. More pressing on the macroeconomic front, however, will be a couple of items on Wednesday as we get UK inflation numbers for the month of March followed by a rate decision out of the Bank of Canada. We’re also moving deeper into earnings season, as we’ll get more US names reporting performance figures from the most recently completed quarter, and this could continue to carry volatility in the equity space.
Below, we look at two of the more interesting FX setups as we move into next week’s trade. The setups below are designed for next week, and waiting for next week’s open could be key to evaluating the continuation possibilities of each in the below trends. A gap through support could vastly alter the backdrop around each of the below scenarios, so waiting for support to actually show after trading opens for next week is key to working with either of these themes.
Bullish Continuation Prospects in GBP/USD
We’ve been following the topside of the British Pound over the past few weeks. The pair has been in a bullish up-trend for over a year now, and prices moved up to a fresh post-Brexit high in January; eventually catching resistance around the 76.4 and 78.6% Fibonacci retracements of the ‘Brexit move’ in the pair. This led to a pullback that lasted for all of February, and prices set a low on the first day of March before a rally began to show.
That rally continued for most of March, and a pullback in the last week of the month opened the door for bullish continuation in the first week of April. Last week, we looked at another topside set in the pair, and this led into another bullish run. Prices are now back at that longer-term area of Fibonacci resistance, and this urges caution for bullish continuation at current levels.
There are three support levels of interest that could allow for bullish setups in the pair. Those levels are at 1.4200, 1.4145 and 1.4097. Support showing at any of those three supports opens the door for topside with stops below the deeper area of support, and targets directed towards 1.4285, and then 1.4352 (the 76.4 and 78.6% retracements).
GBP/USD Four-Hour Chart: Higher-Low Support Potential for GBP/USD Continuation
Chart prepared by James Stanley
EUR/JPY With Bullish Potential After Re-Claiming Support
While last week’s bullish setup in GBP/USD saw the pair breakout to fresh highs, the short-side setup in EUR/JPY saw a bullish reversal, as prices broke back above the key area of resistance that runs from 131.43-132.05. This zone had offered support for the final four months of last year, and as prices in the pair reversed in February, this area began to come back into play. As sellers continued to push, this area eventually became resistance, and that held for the second half of March and into the first week of April.
This week saw prices trend back-above that zone, highlighting the potential for bullish continuation in the pair. With prices remaining above the swing low at 131.75, the door remains open for topside. Support showing at or around 132.05 could be especially attractive for bullish continuation, as this opens the possibility of stops below 131.00 with targets directed towards 133.80.
EUR/JPY Four-Hour Chart: Support Becomes Resistance and Back to Support
Chart prepared by James Stanley
To read more:
Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q1 have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.
Forex Trading Resources
DailyFX offers a plethora of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.
If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.