USD struggles to break new highs, core retail sales and building permits upcoming

Before we get started, I still have an open trade from last week. Both the Euro and Pound sold off near the market close. I have already closed out my EURJPY trade. However, NZDUSD still remains open.

NZDUSD Break-Out
NZDUSD Break-Out

Is this a break-out? I’ll let you deal with the technical terms, but what I am looking at is that the price was unable to break new highs. This pair was in full swing from April 8 to 10, but closed off in quite a bearish bar. This could be partially due to a typical market close behavior. Traders are exiting their positions to avoid unexpected weekend news releases. Nevertheless, I still remain bearish with a tight stop loss to prepare for any unexpected events.

Nevertheless, the I am concerned with the overall USD strength. This is the third month USDCAD is in a range. It tops off at 1.2820 and bottoms out at 1.2360. Price has been stalling in this range since late January of 2015.

The same can be said with USDJPY as well. While USDCAD has been stalling at 2009 highs, USDJPY, on the other hand, is stalling on 2007 highs.

 

For me, I would prepare for a bearish week ahead. Retail sales and core retail sales is being released on Tuesday, building permits and unemployment claims is to be released on Thursday, and CPI and core CPI released on Friday. As for my bearish sentiment, this is better revealed on the hourly charts.

USDJPY Selling Pressure
USDJPY Selling Pressure

Near the end of the market session, we see a bullish bar with a long upper candle tail. While traders have covered their short positions causing a slight change in price, I am still looking at the selling pressure faced by this pair.

USDCAD Sell-Off
USDCAD Sell-Off

Similarly with USDCAD, this pair only started selling off on Friday. It experienced quite a bullish run, but that doesn’t seem to be holding on. After the initial selling followed by a correction, it is time to prepare for the second round of sell-off. Keep in mind that USD strength still exists, I would keep any selling to a short term time duration.

I plan to enter these two trades as soon as the market opens despite the possible lack of liquidity. I see a good 150 pips to be made here if everything goes according to plan.

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