USD and JPY, long term overview

31 - UJ MN

Despite all the doom and gloom that most analytics suggest for USD, price action suggests otherwise. To me it is always important to compare economic events with traders’ psychology I am reading on the charts.

USD has been trading in bearish cycle on Monthly for almost 2 years now. USD is the most bearish currency in that time frame, right after GBP. Additionally, COT reports has been showing increasingly negative sentiment for USD (which did recover in the past months). Fundamental releases were pretty negative for USD as well, and US economy is far from doing well. FED is unable to hike rates even by another 0.25%. So where is a huge USD trend reversal?

The only significant bearish move between all USD pairs was seen in UJ. If we look at the USD profile overall, it has barely corrected to its strong bullish trend. Not only that, but it is approaching strong support areas right now. If bears were not able to show significant bearish cycle when everything was going against USD, I am fully expecting the coming bullish cycle to be strong.

Of course, a reversal of Monthly price action will take time, so we are planning the next 6-12 months here. USD might go lower for a while, but it doesn’t look like the Market is accepting it at these prices very well.

Looking at JPY, which was undoubtedly the strongest currency during he last 2 years, it is also approaching a point where traders are not willing to pay this much for it. UJ in particular is trading in a very important Monthly support area, as seen on the chart. With such expensive Yen, Japanese government is in trouble. They’ve been trying to stop the trend, quite unsuccessfully during the last 6-12 months. However, right now we are at a point where speculators are finally going to help BOJ and start selling JPY.

As usual, it is crucial to watch price action in real time, to adjust our plan as necessary.

August 18th – GU

18 - GU

GBP is possibly starting a Daily reversal. It’s been oversold for way too long and no one wants to sell further at these prices. However, right now it is finishing its bullish cycle on H4. I want to see the price action in the coming bearish cycle, and if bears will show weakness, GBP will be probably the best currency to buy at the moment.

USD is the strongest bearish currency today, but it does not look just as convincing. There is definitely pressure building up, as many pairs face significant support. However, it is finishing its bearish cycle on Daily (with relatively weak bearish price action) and also on H4. UN and UJ look like great trading pairs to buy for the mid term.

August 17th – AC

17 - AC

CAD is clearly losing its bullish momentum. It is the strogest bullish currency today, but it is unable to make new highs, facing strong resistance in many pairs. There are still many TLs in CAD profile that needs to be broken before the trend reversal is confirmed, but CN is already offering a great selling price.

AUD is the strongest bullish pair today and it is still going strong. The price is correcting on H1 right now, but bullish price action is quite week in most pairs. However, AU and AN look like renewing the highs – all bearish attempts have been rejected in the last 2 weeks.

GA

15 - GA

GBP has started the day rising, but it was facing many resistance areas from the previous week, breaking which would have been too much to ask for.

AUD did not really grow today, if we look at other trading pairs. Other than AG, only AU was more or less bullish. AUD is very likely to continue its Daily bearish cycle.

GA – BOE rate cut

4 - GA

A strong bearish move in GBP due to the rate cut today. It will be interesting to watch if GBP sustains this move, since it is meeting support areas in some pairs (GE, GN, GU, GH).

AUD was the strongest bullish currency of the day, but most AUD pairs have struggled to push higher (AU, AC, AN, AJ). AC and AU offer good selling prices.

NC – Sharp Rejection

3 - NC

Very sharp rejection of NZD’s bullish move. Very interesting to see clear divergence on H4 before the reversal. H1 showed a great entry opportunity, thanks to CAD correction in yellow rectangle.