XAUUSD
We are starting this week with a look at Gold, last we discussed Gold on the 18th of May we were keeping an eye on the consolidation with the range between $1,680 and $1,750 as we waited for a breakout.
Gold also has put in what seems to be an inverse head and shoulders. Head and shoulders or inverse head and shoulders are usually traded as reversal patterns but they can also be traded as a continuation pattern in strong trends like the one gold has been in since 2015.
Gold has ranged for three months during which the inverse head and shoulders was formed, it broke out and confirmed these on Monday retested on Tuesday and retested support $1,750 again on Friday and this is where things became more interesting and appealing.
Friday’s candle formed a pin bar and also engulfed Thursday’s candle, put these together range and inverse head shoulders breakout, pin bar and bullish engulfing candle and we have a set up no one should sleep on.
As long as price stays above $1,750 then $1,800 is exposed. However, if we see Gold close below $1,750 that will negate this outlook and probably keep in consolidation longer.
Fig 1: GOLD daily time frame
EURJPY
EURJPY featured last two weeks in my last forecast, I discussed the confirmed false break of the descending channel and the possibility we might see EUR lose more grounds to the yen. However sellers have struggled ever since to keep the EUR bellow 119.75 as it closed above it and held.
Monday and Friday price action made me bring it up today. Monday formed a bullish engulfing candle, which is yet to be negated, buyers were resisted at 120.920 channel resistance.
Friday formed another bull signal, the pin bar. Buyers will be challenging the resistance this week a confirmed breakout from 120.920 will expose 121.470 followed by 122.630 and 123.800.
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Alternatively if EURJPY clears the low of that engulfing candle that will send the pair through 166.81 to 116.00 and possibly that channel bottom at 109.830
Fig 2: EURJPY daily
GBPUSD
GBPUSD is currently trending within an ascending channel that started in May. It is currently approaching 1.22590. It is important to note that GBPUSD is respecting this channel on the daily and four hour time frames.
I will be watching to see how the cable reacts to 1.2259 a bounce will send it seeking the channel top once again. Key resistance on the way up includes 1.2450, 1.2760, and 1.2940 channel resistance.
Alternatively a close below 1.22590 will expose lower level, since the channel is on the four hour time and the daily time frames as confirmed on the four hour time frame will be the first indication of weakness. If this happens 1.220, 1.200 and 1.178 will be exposed on the way down.
Fig 3: GBPUSD daily frame
GBPNZD
I discussed GBPNZD on the 11th of May as the pair confirmed a break below the trend line highlighted. In the following days to my highlight, GBPNZD retested the trend line and the sell off ensued and so far moved 1236 pips.
GBPNZD is currently 284 pips from confluence of support 1.892. At this point I will like to state GBPNZD has been in a long term down trend and this ascending channel may be a correction before the next leg lower. The reaction of GBPNZD at 1.892 will determine the future of GBPNZD.
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If we get a bullish signal we may see the pair rotate and move higher from the 1.892. If GBPNZD breaks below the confluence of support that will open the door to 1.840, 1.7940 and 1.6870.
Fig 4: GBPNZD daily time frame
Written by:
Chijioke Maduakor
