The USD took a beating for the last week or so partly due to several disappointments in the economic releases. The consumer confidence, new home sales, and core CPI all fell while the unemployment claims rose. The prelim GDP also experienced a slower growth causing Janet Yellen to delay the interest rate hike. As the rate hike is delayed, investors lose the bullish sentiment in the USD. Nevertheless, there are still a few more technical plays.
EURJPY is expected to continue its original down trend after experiencing a correction. There were several opportunities for this pair to make a new high, but it simply did not hold up. In fact, it failed 5 times just counting the correctional fractals. This pair is expected to hit as low as 131.60 or trend even lower.
This pair also reveals a daily breakout closing on Friday with minimal market activity. Moderate cover shorts from sellers, but it does not look like any buying is taking place. As of now, this pair remains bearish.
USDJPY seems to be back on track as it tests the upper boundary in this latest consolidation once again. This wedge formed in mid-December, 2014 and price may just be about to break out. Below is a 6-hour time frame to capture the entire consolidation.
I would not be trading this just yet as trendlines are only suggestions as to where price should turn. There is no guarantee that the price will turn around nor break out. If that’s the case, what is significant of looking at this? My sentiment is still bullish, the USD strength does not look to be over. As this consolidation tightens, I expect a upwards breakout with strong momentum. Currently, this pair is on my watch list.
Finally, silver or the XAGUSD CFD that I’m monitoring. Silver short isn’t over yet as it breaks through another wedge on a lower time frame.
The current projected target is the $15.70 upper bound zone. This was tested and held up three times already. Until price enters this zone will we be able to see if the buying pressure is still there.