Faraday FX Majors Preview

As the dust settles from Trump’s divisive inauguration speech let’s take a look at how the majors are shaping up.

EUR/USD

EUR/USD’s recovery is likely to be tested this week…

Prices have been rotating higher since the turn of the year, forming a bullish support line. However, the market is now heading up into a thick zone of resistance defined by December’s highest high (1.0873) and highest close (1.0763).

Whilst the resistance zone is compelling it’s important to remember that short-term momentum remains bullish. With this in mind we will only look to short EUR/USD following clear signs of buying exhaustion.

EUR/USD Daily Candle Chart

GBP/USD

Last week’s Theresa May inspired Brexit bounce has significantly altered the short-term dynamics of this market.

Such a robust rally from the flash crash lows could signal the start of an A,B,C,D ‘harmonic move’ higher. Should this harmonic move materialise it would complete at the 1.2750 resistance zone.

Whilst tomorrow’s High Court ruling may see a jump in volatility the stage is set for cable’s recovery to continue.

GBP/USD Daily Candle Chart

USD/JPY

USD/JPY remains locked in ‘retracement mode’ with prices rotating lower inside a descending channel.

This morning’s risk averse reaction to Trump’s inauguration has seen USD/JPY brake lower from Friday’s tight trading range. A retest of last week’s pivot low at 112.50 appears to be the first order of play.

Given the gusto with which the market rallied from 112.50 last week we would not be surprised to see USD/JPY hammer out a bottom at those levels.

USD/JPY Daily Candle Chart

AUD/USD

The Aussie’s stellar start to 2017 continued last week as prices broke and held above resistance at 0.7520.

Whilst the dominant market structure is firmly bullish, Friday’s price action gave the first indication that indecision may be creeping in… Having hit highs of 0.7588 the market ended the session back where it opened, forming a ‘doji day’.

Friday’s doji candle should not be treated as a reversal pattern in its own right. It should however be used as an early warning signal that the Aussies ascent may be set to slow.

AUD/USD Daily Candle Chart

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