08 Apr EUR:USD, GBP:JPY, USD:CAD Brief Analysis For W/C 9th April 2012
As discussed in the Trading Round-Up for Last Week I’ve got no high probability swing set-ups on the radar right now but promised to talk about a couple of things I’m watching that could offer some shorter term trades and may eventually become solid swing trading candidates.
A simple set-up on the 4 Hourly time frame where price appears to have found at least temporary support at the back test of it’s previous falling channel. MACD is oversold and just about to cross upwards whilst price is miles away from all of it’s moving averages. A long entry with stops below last Week’s low initially targeting 1.3211 area could yield 100 pips or more.
The reason for targeting 1.3211 area lies with the fact that it’s both a 50% retracement of the move down from the highs whilst also being exactly the level where the bullish break out from the channel occurred. As I’ve mentioned before, a break out level from a channel or trend line often becomes a future S/R level. Further more as time goes on this level could well coincide with the 50 and 100 MA’s which should start curling down to meet price at the half way mark.
My favourite Yen swing candidate still remains as CAD:JPY but GBP:JPY comes a close 2nd. 130.35 has previously proven itself as a strong Support/Resistance level. A failed attempt of price trying to break back above this level could well offer a nice swing short opportunity as per the annotated scenario drawn on this chart. Ideally a break above this level to tag the 20 MA with an eventual daily close below 130.35 would have me very interested in a short entry. If I’m feeling aggressive I may enter at the 20MA looking for the daily close below 130.35 and setting stop loss to break even.
USD:CAD has now held onto it’s tight range for considerable time and MACD is hinting at some further upside to come.
When MACD “trends” tightly in the way it has thus far on the chart below it is common to see a continuation of a slow gradual rise (of MACD) and that eventually leads to a rally (on Price). I’ll find an example of this to post below, but first of all, here is the USD:CAD chart with a couple of upside target levels and an annotation of what I’d expect MACD to do:
Here’s a chart hopefully explaining what I mean about tightly trending MACD and how this often occurs with rounded bottoms that lead to rallies on price. This particular example is GBP:NZD which I successfully swing traded in early March: