So sequester Friday turned out to be a relative non event, although there were some interesting comments made on the potential US downgrade should the debt ceiling issues remain unresolved.
The COT reports last week provided some real insight into how markets could potentially shape moving forward over the next few weeks.
US Nonfarms due next week as well as some interest rate decisions. Both are unexpected to provide any changes that could spark some interest with wider comments around the events from key speakers.
In genera,l price action is again at key levels, long term trends have been on correctional runs lately. Last week, they threatened to turn from correctional into full blown reversals with the Euro now near key weekly support again. Further drops could result in a full blown risk off mode, especially if the continued uncertainty in Italy and concerns for Spain and France emerge.
EUR/USD
The euro clawed back above the 1.30 level late on Friday, which we were honestly hoping it would be unable to do, although the reality is that majority of this was likely due to profit taking. The pair now sits at major weekly support again. If we find support here we could easily see a move to test recent highs, if these levels fail we could be looking at a much bigger move lower towards 1.2600.
Personal Bias: Bearish (just)
Support: 1.3000
Resistance: 1.3150
Strategy: Still holding short a runner (locked in profit) having booked over 200 pips on initial short, looking for a break of the 1.30 handle to confirm further downside, or a strong rejection to point towards a move higher.
GBP/USD
The British pound has been on a bit of tear lower recently. With the pair in oversold territory, if you aren't already short we would wait for bounces and rejections of higher prices in order to get there.
Personal Bias: Bearish
Support: 1.5000 / 1.4800 (monthly support)
Resistance: 1.5190 / 1.5370
Strategy: Look for sell signals on any retracements higher
AUD/USD
We continue to like the Aussie for a further push lower, but find potentially strong support not far below. With Retail Traders so heavily long though, there is potential for further downside. Iif support breaks, we could see a more rapid drop in price.
For the moment we remain sidelined as the pair has chopped around, but would look at any potential pushes higher as slightly correctional and opportunities to short this pair.
Personal Bias: Bearish
Support: 1.0200
Resistance: 1.0270
Strategy: Stand aside
USD/JPY
Price rejections last week offer some good long opportunities on the 4hr charts. The weekly chart and the price rejection of the 91.00 handle also points to potential further upside. We expect this pair to remain relatively choppy but see further potential upside from here.
Bounce in the COT index also points to further potential upside.
Personal Bias: Neutral / Bullish
Support: 91.00 / 88.00
Resistance: 93.00
Strategy: sidelined - wait for clear entry signals. Break of the 94.50 could point towards the 100 mark.
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