Tomorrow at 1:30pm BST the NFP and unemployment numbers are being released, which could provide the breakout of critical levels in USD pairs, such as in USD/Yen.
In the hourly, USDJPY is on a clear up trend, within a channel, and approaching the important resistance at 104.32. The market has been rising on high volumes, and the current supply is normal in overhead zones such as this one. Depending on the NFP numbers, the breakout could go either way, and both are trade-able.
- In case the up trendline breaks, you should go to a lower timeframe such as M15 to trade it, as the movement might not be so prolonged without further rallies and tests.
- In case there is a breakout to the upside, it should be traded on H4 since it’s a trade to be held for the mid-term.
On the 4 hours timeframe, we can see the prices are actually on a selling congestion zone, which reinforces the plan idea that there should be a breakout to trade it.
Before Wednesday’s FOMC statement, USDCAD started showing supply signs above a strong zone. On the FOMC’s statement release, there was a rally, but the prices quickly tumbled, forming what we call an ‘upthrust’, on very high volume. This is what we know to be of a good breakout sign, and breakouts can be traded when it occurs.
The trade was closed after a VSA demand signal from H4, with a narrow range bar behind already showing demand coming in the market.
Right now, the market is approaching the previous zone at 1.315, and we can see VSA showing further supply, with the background still being weak. If the line drawn at 1.311 is broken (which coincides with the latest low), it’s a good confirmation to short the market. As of now, the market is rallying, and it will still have to prove the recent supply is enough to start a major turn. Other way to confirm it, is to wait for the dynamic trend to turn down.
In the last post, I noted there was strength behind that had been sustaining the prices, but further confirmation was needed to enter in a trade. In GBPUSD, the confirmation was the weak congestion zone being broken, but as prices were approaching it, there was some supply shown by a weak congestion bar. The reaction rally was on low volume, showing there wasn’t enough ‘gas’ to break the resistance. On the London session, prices broke out the lower zone at 1.316 and the support at 1.313 in the same hour, on very high volume, which was the definite confirmation of a bearish movement ahead.
While this market sell-off goes on, there isn’t much that can be done; there should be a consolidation or a price rally to start planning a trade in GBPUSD in the intraday charts.
The Pound has been showing strength in the volumes lately, on the major pairs, with congestions showing a demand zone being formed at these prices.
In GBPUSD the prices just bounced off the demand zone, which were the first long signal, due to the strength behind. The target is at 1.326, from where a breakout can be traded on a lower timeframe. Alternatively, if there is a correction onto 1.319 on low volume, there can be another long opportunity.
EURGBP is showing some selling behind, which is good for the GBP. A trendline break would give a trend changing confirmation, for a short trade.
GBPJPY is ranging for a longer time than GBPUSD, and didn’t go down as much as GBPUSD did recently. There is buying behind showed by VSA and congestion bars, along with a strong congestion zone. The plan is to look for a trendline break.