Razvan Mihai, CFTe
Forex Rally
EURUSD - Perfect signal given by the Falling Wedge
In the last week analysis I have mentioned a Falling Wedge, accompanied by a positive divergence on the 14 periods RSI, which were signaling a possible bullish move. After the price broke the upper line of the price pattern, it rallied towards 1.0640 and bounced back two times before it rallied again almost 450 pips, hitting 1.0980. The strong up move was triggered by the ECB’s December monetary policy, but the technical signals were there.
After hitting a high at 1.0980, the price bounced back and retested the area between 38.2 Fibonacci retrace and 1.0800. A bounce from this area could send the price back above 1.0900, while a close below the round number level, would be a strong bearish signal. A fall could target the next support area from 1.0700.
USDJPY - 1 Month of Sideways Move
USDJPY continued to move in the range between 122.24 and 123.63. Even though the volatility of the Forex market increased last week after the ECB monetary policy meeting, the price of this currency pair did not break the boundaries.
The price is now trading again around the upper limit of the range. Considering the fact that the rectangle was drawn on an uptrend, the probability is higher for the price to break on the upside. In this scenario, I would expect a rally to 125.00. The alternative scenario would be for the dollar to lose against the Japanese yen and retest 122.24.
NZDUSD - Hitting Higher Highs
The NZDUSD broke the upper line of the symmetrical triangle and rallied to the next key resistance from 0.6785. Considering the higher highs and the higher lows the price drew, the trend is clearly an up one.
As long as the last low of 0.6607 will not be broken, we can expect for the trend to continue. If the price will break below this level, we might witness a reversal. A stronger signal for the reversal will be given by the break below the main trend line. In this bearish scenario we can expect for the price to drop back towards 0.6500.
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