AUD/USD is hitting important resistance levels
A one-year trendline from April 2016 is located at 7705 this week. The 2017 high from the February and March peaks lies just above at 7741/47. The pair is just starting to become overbought in a one-year sideways trend. If we are to remain in a sideways trend we will top out in this 42-pip band (7705-7747).
This is a decent swing trade opportunity if you are interested in running a position over the weekend, into next week and beyond. Selling the 42-pip band with a stop at 7780 gives us just over 30 pips above the year high in case of a fake spike. This happens all too often of course.
However, we will have to monitor carefully in case we see a breakout. Tonight is one of the most important closes of the year as it is the end of June. This means the end of the week, the month, the quarter and the first half of the year. For the first bullish signal confirmation we would need at least a close tonight above 7710. But we will need at least a two-day close above 7750 for a buy signal.
Trading a breakout is never easy as you are only sure the breakout is real when the price is running away from you. A weekly/monthly/quarterly/half-yearly close above 7750 tonight, however, should be seen as a buy signal.
USD/JPY and EUR/USD
USD/JPY has been forming a negative rising wedge for three weeks. Yesterday we topped exactly at the upper trendline resistance of this three-week trendline, as you can see in the chart below. We rejected the top of the rising wedge and collapsed through the lower trendline.
The outlook is therefore negative now, especially when you consider we are in a six-month bear trend. On a bounce look for a selling opportunity at 112.40/50, as we re-test the lower trendline. It is important to note the 100-week and 500-day moving averages, also at this level, to reinforce the strength of this area.
However, if we unexpectedly continue higher there is more important three-week and three-month trendline resistance at 113.20/30. This would be the next selling opportunity.
EUR/USD has worked well this week on the breakout above the November high (the day of the US election result) at 1.1299. We even got a chance to buy into longs on the pullback to 1.1300/1.1295 after the breakout.
We are closing in on the target and two-year trendline resistance at 1.1450/60 in overbought conditions. A top here would trigger short-term profit-taking to 1.1400/1.1390 and perhaps as far as support at 1.1370/60.
Stock markets are obviously in need of a short-term correction to say the least. We should, or at least could, start to react to four of the five major central banks suggesting higher rates are in the pipeline.
The Nasdaq 100 is certainly breaking important seven-month trendline support as you can see in the daily chart below. We head towards the first 23.6% Fibonacci support at 5585/80 and the 100-day moving average just below at 5540/35.
Note how the Nasdaq rejected the upper five-year trendline and is now moving towards a test of the lower five-year trendline. This occurs as the overbought stochastic on the weekly chart turns negative from a severely overbought position.
Technical Analyst & Trader
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