With volatility generally low opportunities aren’t in abundance but that doesn’t mean there are still set-ups to take advantage of. NZDUSD is trading at a big level of resistance again after reversing off from there last week, looking for lower prices from here. CADJPY broke a head-and-shoulders pattern and is testing the neckline of the pattern. Gold continues to ride neatly within the confines of a bullish channel; stay within and outlook neutral to bullish, break outside and sellers may show up again in earnest.
- NZDUSD at resistance within macro-wedge
- CADJPY testing neckline of H&S pattern
- Gold channel is well-defined, provides solid guide
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NZDUSD at resistance within macro-wedge
Kiwi posted a strong reversal candle last week at the top-side trend-line of a broad macro-wedge. The wedge has been developing for months and puts NZDUSD on breakout alert with the apex of the pattern just around the corner. It should break inside the next 2-4 weeks.
For now, though, the risk is that early week strength back towards the reversal at resistance fades and another down-move develops. As long as NZDUSD doesn’t close above last week’s high at 6938 the outlook will remain neutral to negative.
NZDUSD Daily Chart (Trading at top of wedge)
CADJPY testing neckline of H&S pattern
On Friday, CADJPY broke the neckline of a head-and-shoulders pattern, a set-up we looked at in a webinar to conclude the week. We are seeing a thorough testing of the neckline develop right now, and on that a rejection back lower could soon have CADJPY rolling back downhill. The size of the formation suggests a move towards the 80-mark or worse is in the cards.
CADJPY Daily Chart (H&S pattern)
Gold channel is well-defined, provides solid guide
Gold continues to carve out an impressive channel which traders on both sides of the tape can use as a strong reference. It’s well-defined enough that even turning points on the hourly time-frame are pretty precise. Bottom line with this structure is this – stay inside and the trading bias will remain neutral to bullish, trade outside and the down-move off last month’s high could grow legs again. The overlapping price action suggests it’s a corrective move higher, but we’ll need to see the currently positive tone broken first before running with an outright bearish bias.
Gold Daily Chart (move higher looks corrective)
Gold Hourly Chart (Clean channel, indeed)
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—Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX