Trader thoughts - the long and short of it

The weekly charts that matter into the April close.

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Source: Bloomberg

EUR/USD weekly

It’s make-or-break for EUR/USD over the next few days. We’ve been tracking this consolidation in for months now and heading into the close of April trade the focus is on a resolution to this near-term consolidation pattern just above former slope resistance (blue) / turned support. Note that daily RSI (relative strength index) has made a break below a three point support trigger and highlights the threat for a downside break.

Bottom line:  Last week’s outside-reversal candle does cast a bearish outlook on price but we’ll need to clear this formation to validate. Key support rests at 1.2167- a break below this threshold would be needed to validate a larger-scale reversal in price targeting the 2012 low at 1.2042 and the 2018 opening-range lows at 1.1916. Interim resistance stands with the February trendline – a breach / close above this mark would shift the focus back toward the critical resistance confluence at 1.2598 where the 61.8% retracement of the 2014 decline converges on the 2008 slope line. For now- look for a break of this range.

GBP/USD weekly

The British Pound has been trading within the confines of this multi-year ascending pitchfork formation with price posting a weekly outside-day reversal off the 2018 highs last week. The threat remains lower near-term but ultimately advance remains constructive while above 1.3675-1.3737 where the 2016 high-week reversal close (Brexit) and the 23.6% retracement of the 2017 advance converge on the lower median-line parallel (blue). Resistance remains steady at 1.4346 with a breach higher targeting 1.4571.

Bottom line: Cable may be in for a larger correction here before resuming higher. For now, look for resistance at the yearly high-close  / 200-week moving average at 1.4236 with a break lower to ultimately offer more favorable long-entries near structural support.  In the event of a topside breach, look for initial resistance targets at 1.4571.

AUD/USD weekly

Aussie has continued to hold just above a critical support barrier at 7635/37- where  the 38.2% retracement of the 2016 advance and the 61.8% retracement of the May advance converge on multi-year trendline support. Note that last week’s decline erased all of the April gains with price closing just above the monthly low-close on Friday at 7660. A break below this threshold would risk substantial losses for the pound with such a scenario targeting 7480 -7500. A breach / close above yearly-open resistance at 7801 would be needed to shift the medium-term focus back to the long-side.

Bottom line: Aussie is testing multi-year uptrend slope support with the immediate short-bias at risk while above 7636 – look for a reaction this week with the focus range to beat between 7635- 7800.

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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.

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