This report will discuss potential trading set ups this week in addition to updating previous trade ideas

Summary of Trade Ideas

  • GBP/USD – Short Bias 
  • NZD/CHF – Long Bias 
  • CHF/JPY – Short Bias 

GBP/USD 

As illustrated above, GBP/USD is trading in a downtrend structure, this is evidenced by a series of lower high and lower lows. There is also an upper trendline resistance that prices are respecting, recent price action has rejected from this trendline. If we look at the previous high, a rejection from the resistance trendline saw an eventual sharp sell-off and consequently a new lower low was formed. The 8-day and 20-day exponential moving averages have also crossed to the downside at around 1.28584, suggesting a technical move lower.

Fundamentally there isn’t much reason to buy the sterling across the board with the internal market bill issue at the forefront in addition to a worrying rapid rise in covid-19 infections across the UK. However do bear in mind that the key internal market bill vote will be taking place at 10 PM EST tonight, therefore the pound will be subdued to a level of volatility. Should the bill be passed, tensions between the EU and the UK will take a turn for the worse, and this could see a post brexit style crash in the Sterling with the future of trade seemingly uncertain between the two powerhouses.

NZD/CHF 

NZD/CHF is showing interesting price action, before looking at specific technical structures, it is key to note that price action is generally in an uptrend. Prices have risen sharply from 0.59 , reaching almost 0.62, as a result it is not unusual at all for prices to pull back and form a ‘corrective structure’ in preparation for a leg higher. This ‘corrective’ structure seems to be in the form of a falling wedge in the case of NZD/CHF , we can see that prices have broken above the upper trendline resistance of the wedge and rejected from it, turning the resistance trendline into a new support. Should the technical indicators be respected, there is a good case for this pair to push towards the 0.165 area , a key resistance area.

Prices have successfully broken above the 200-day EMA upon breaking the wedge structure to the upside, the 8-day and 20-day EMA’s have also just crossed to the upside at around 0.60690, suggesting further upside momentum.

CHF/JPY

We spoke about CHF/JPY in the previous technical report (check article 600+ in 2 days ?), where the uptrend structure looked exhausted and the latest price action showed a double top formation, with prices failing to create a new higher high at a key resistance level (118.00).

Current prices seem to be trading slightly sideways in a channel down structure, though this behaviour is typical before a large impulse move. Latest price action shows a rejection from the upper trendline resistance of the channel, it is likely that the lower trendline support of the channel will be met shortly. It is worth noting that CHF/JPY has been trading in a 118-108 range since 2017. It would take a considerable fundamental driver for this range to be broken, the weekly candlestick has shown an encouraging bearish rejection from the upper 118 resistance band, it is highly likely that prices will move lower over the course of the next few months should the current monthly candle close bearish.