Forex Daily Roundup – 8/25/2016

With Janet Yellen scheduled to speak tomorrow from Jackson Hole, things were predictably very quiet today. As a result, there were literally only three changes to our trade tracker, all on the 15-minute time frames:

Screenshot 2016-08-25 12.58.50

As you can clearly see, opportunities are few and far between. I’ll try to make this quick for each pair since little has changed since yesterday:

EUR/USD

The Euro did a whole lot o’ nada today, edging just slightly higher. The 4-hour chart is the one I’m keeping my eye on:

Screenshot 2016-08-25 13.01.01

If price were to come down to our confluence of support somewhere in the low 1.1200 zone I’d consider take a long. But until then I’m on the sidelines. For now though, the 50-bar SMA on the 4-hour chart does seem to be capping the pairs attempt to head higher. So for you scalpers out there you could try to short the pair with a very tight stop above recent highs.

Not my cup of tea though.

USD/CAD

The pair was very range bound today, but the 4-hour 50-SMA seems to have flattened up and may start bending higher soon:

Screenshot 2016-08-25 13.03.44

I remain biased for a push higher toward 1.3000. Whether or not it’s sustainable is another question. I’d really like the overall technical picture to turn bullish and align with oil fundamentals. But it may be awhile before that happens (if at all).

For now we remain long, slightly in profit, and hoping for a small win on a push higher.

AUD/USD

I’m not going to even bother with a chart for Aussie because it’s done so very little since yesterday. The pair continues to trade at support, and if you’re interested in what I’m looking at, just check out my chart from yesterday’s roundup.

USD/JPY

The pair can’t seem to break above 100.60 for the life of it, but as I noted yesterday, something’s gotta give soon:

Screenshot 2016-08-25 13.07.58

The pair is essentially still consolidating in a symmetrical triangle which is generally seen as a continuation pattern. As quoted from the link:

“Nine times out of 10, the breakout will occur in the direction of the existing trend.”

I don’t think anyone needs reminding, but the existing trend is clearly down:

Screenshot 2016-08-25 13.12.53

Hopefully this consolidation breaks as expected, to the downside.

We remain short USD/JPY with an aggressive price target.

GBP/USD

We had two Sterling longs on with our Patreon group and we were being careful to protect profits. Both trades were stopped out for profits of 133 pips and 15 pips respectively. Nothing substantial, but in these market conditions… I’ll take it!

We’ve since re-entered long based on the 1-hour chart:

Screenshot 2016-08-25 13.16.06

We were able to snag an entry today at 1.3170 which was barely filled. But I wouldn’t be surprised if we trade at that level again. Our stop and profit target is in place, so hopefully we’ll see another positive trade out of this one.

I like the fact that we’re finding support against the trend channel and the 100-hour SMA. The horizontal, dashed magenta line was also resistance on August 18th, then support on August 23rd, so it’s not surprising to see this area offering some support now. I also really like it when we have confluence of support or resistance. In this case we have the horizontal support, the 100-hour SMA, and the trend channel support. I’ll take that trade all day long because it will work more often than not.

But I’d really like to see us get back above the 50-hour SMA to start building confidence in the trade. Then of course we need to break the most recent highs near 1.3170. All in all, I think this is the best opportunity for a trade in any pair right now.

One other thing I like about GBP/USD right now is the SMA action on the 4-hour chart. Take a look:

Screenshot 2016-08-25 13.23.47

The 50-bar SMA has crossed over the 100-bar SMA and price trades above the 200-bar SMA. This is pretty interesting. And the 50-bar SMA is only about 35 pips below the 200-bar SMA. So a crossover there could happen soon. This is all relatively bullish, and we’d be fools to ignore it.

Yes, the larger trend is down, but trend do change and you’d miss those changes if you fail to constantly monitor the lower timeframes. If the 4-hour time frame can turn bullish, there may be more upside than most are considering.

GBP/JPY

Yesterday I mentioned I wasn’t very excited to trade GBP/JPY until USD/JPY figures out what it wants to do. But I did say that if you disagree with me, a pullback to ~132.50 could be a decent shot at a long. We saw that play out and price seems to be trying to put in a base at current levels:

Screenshot 2016-08-25 13.21.36

But it still feels like we’ll likely trade mostly sideways until USD/JPY breaks out. So I’m staying on the sidelines until that happens.

Mini-Conclusion

Don’t expect much action tonight. Things are pretty buckled down in anticipation of Yellen’s speech tomorrow. Unless we see a big dump in Asian equities, I’d be surprised if we see much action at all. So get some rest!

And even after Yellen’s speech… there’s a good chance it does little to move the market, so don’t start pumping ‘Eye of The Tiger’ in preparation. I truly do hope that she says something to wake up the markets, but I’m not banking on it.

This is the last update until Sunday’s weekly outlook unless you’re a Patreon member. So enjoy your weekend and good luck tomorrow.

Geppy

I've been involved in the forex markets for over a decade, initially starting as an FX trader at Allston Trading in Chicago. Eventually I went on and founded my own (non trading related) company. I spend my days working from home and trading forex, equity, and crypto markets.

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