AUD/USD Broke Out Below The Pennant

AUD/USD broke out below the pennant that had been developing for over two years and from now on we can expect a medium or long term depreciation with a first target to the downside at 0.7200.

For the moment, however, the pair has reached a strong support on the W1 time frame at 0.7500 and here there are two possible scenarios:

In case there is a breakout below that support level we could expect a continuation of the downward trend to the first target at 0.7200 without a significant correction.

In case the support at 0.7500 holds and the pair fails to break out below it the first time we could see a correction north to test the trend line it broke out below with target around 0.7650 – 0.7700.

On the M15, however, we can see an expanding triangle which could prove to be a reversal figure and the pair could rally for a correction and a test of the breakout before it continues falling.

I Expect A Bearish USD/JPY Correction Before A Test Of The Resistance at 110.00 – 110.50

I expect a renewal of the downward movement for the USD/JPY pair too. 

The D1 bar for last Friday closed as a hanging man at the high of the upward movement under the W1 resistance at 109.017.

I expect that next week the depreciation will continue to the zone around 108.30 – 107.80 where the pair will meet a strong support on the W1 time frame.

On the monthly time, however, the upward trend is still valid. Until the end of the month there is only one more daily trading session left, the monthly bar will close on Monday, but the strong resistance is all way at 110.00 – 110.50.

That is why I expect the depreciation at the beginning of next week to be corrective in nature, in preparation for the test of the monthly resistance.

GBP/USD Is Renewing Its Downward Trend

After four weeks of being range-bound during which time the pair formed a barbed wire pattern on the W1 time frame consisting of four bars, GBP/AUD is on its way to a trend reversal from an upward to a downward trend.

The weekly bar from last week closed as a very impressive pin bar under the monthly and W1 resistance at 1.81654.

My expectation is that during the next week the downward trend will lead the pair to the support trend line of the upward trend (in red) or even a little lower, to the 1.7950 – 1.7850 zone.

This zone is a strong support for the GBP and the pair won’t overcome it easily. If the breakout does occur we could we expect the downward trend to continue to 1.7100 – 1.7000.

The alternative scenario is for a renewal of the rally, but I think it looks less valid for the moment.

The Bullish USD/JPY Trend Will Remain In The Medium Term

 As I expected, USD/JPY continued moving to the upside>>>  and for the last week the pair has rallied with 180 pips (from 107.656 to 109.469).

I expect that next week the move north will last until 110.50, after which there could be a corrective depreciation of about 150 pips, which means it could reach 109.00 - 108.80.

The main trend, however, will remain bullish, and the pair, I think, will reach the resistance trend line around 111.60 – 112.00.

For the moment the pair is developing within a trend channel that is over 1000 pips wide, but it is possible for it to form a different pattern in the long term.

I Expect An EUR/JPY Drop

EUR/JPY could not quite reach 133.50 and it stopped at 133.64, a level from which I expect the beginning of a correction.

For the moment the pair is range-bound within the zone around 132.80 – 133.00 which is a rather strong local support zone (best seen on the H1 time frame) and if there is a breakout below that zone we could expect a drop to 132.50 where is the next strong support zone.

If the pair breaks out below that too we could expect the depreciation to continue toward 132.00 and 131.50.

In the alternate scenario the pair will rally, but that scenario could develop only after a breakout above the strong resistance at 133.50.

The Forex Calendar For This Week

This week is particularly eventful and I think it is important to be on the lookout for the various news that could have a major effect on the market:

On Monday we can expect a speech by the Bank of Canada Governor Poloz, the Australian CPI q/q and the Trimmed Mean CPI q/q. 

On Tuesday will be announced the US Conference Board Consumer Confidence.

On Wednesday there will be a speech again by the Bank of Canada Governor Poloz and the US Crude Oil Inventories will be announced.

Thursday is particularly eventful: there will be an ECB press conference, the US will announce the Core Durable Goods m/m, the Bank of Japan will announce its Bank Rate, Monetary Policy Statement and Outlook Report. 

On Friday there will be a Bank of Japan press conference, a speech by the Swiss National Bank Board Chairman Thomas Jordan, we can expect the British Preliminary GDP q/q, the US Advance GDP q/q and then there will be a speech by the Bank of England Governor Carney.