Three Major Forex Pairs That Look Bullish This Week
You Can’t Always Be Right
A few week’s ago I wrote about a signal I felt pretty strongly about, so strongly I titled my post Go Long The Dollar Now. Sadly, the signa didn’t pan out quite the way I though it would but that’s the way it goes sometimes. Trades don’t go the way they are supposed to. What happened? There has been some signs of stability in certain economies that, coupled with the Phase One Trade Deal, suggest there could be some economic firming in the coming year. With economic firming we usually get some policy adjustment and with policy adjustment upward movement in forex markets.
Look at the GBP/USD. The pound skyrocketed not on the Phase One Deal but Boris Johnson’s stunning victory in Parliament. He and the Conservative Party have secured a stranglehold on UK politics that is sure to mean economic expansion. Of course, the Brexit will come first but that should be smooth and quick. Once completed the UK will be free to engage in activity and trade with whomever it wants, at the very least there will be no more uncertainty and a business-friendly government.
The GBP/USD is now testing resistance at the two-year high and looks like it will break on through to the other side. Convergences in the MACD on both the daily and weekly charts agree, upward pressure is building. Once that pressure wears down resistance a move up to the 1.4225 level is very, very possible.
The EUR/USD is showing similar strength if in a different way. This pair has been in a steady downtrend for over two years now and may be in reversal. The pair hit a bottom in September and October that has since confirmed in price action and both the indicators. Stochastic shows strong support at this level while MACD has turned bullish. Price action formed a higher low, moved above the short-term EMA, and is now set to break above resistance. Resistance is at the 1.1200 level, if it is broken a move up to 1.400 is very possible.
The dollar signal wasn’t all bad. There is some sign of bullish activity in the USD/JPY as traders begin to move away from risk-off yen trades to risk-on dollar trades. The current point of resistance is the 109.50, if prices move above that a strong updraft could begin. The long-term target is 112.00, before that are targets near 110.00 and 111.00.
