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Weekly Forex Price Action Outlook June 3rd – June 8th
The Euro shed about 300pips last week but ended the week strong forming a bullish engulfing bar off the 1.2300 figure. Although it has done this earlier during this one month sell-off and downtrend, we feel its possible this one has a little more chap in it being the record IMM shorts we have been talking about on this blog. Intraday players can look for a possible short around 1.2500 which is swing point above or more conservative players can wait for a pullback to the dynamic resistance and swing point at 1.2627 looking for price action triggers to short there. Until it clears these levels, nothing has changed our bearish bias on the EURO.
After posting 30 consecutive daily closes below the 20ema and selling off aggressively last week, the USDJPY is entering a very precarious zone, a 200pip range where it stayed stuck being held in check by the BOJ who eventually had enough early this year intervening to directly weaken the pair. For bears, being quite a mature trend, we suggest waiting for a pullback to the 79 figure before adding any shorts while bulls can wait for a move down to 76 where there will undoubtedly be bulls looking to enter long considering this was the level the BOJ intervened before and held in check for so long.
Selling off for an impressive 5 weeks in a row (only happened 4x in 10 years), the Pound landed on a multi-year support level at 1.5300 which could be part of a larger weekly neckline from a head and shoulders pattern. Considering the pair has only sold off 4x for 5 weeks in a row, 3x at 6 weeks consecutively, and 1x at 7 weeks, it is possible the move does not have much more downside before needing a little reprieve so we would not be surprised to see some corrective price action here. However, should the pair break and close below 1.5240, then the next downside support does not come in till the big figure at 1.5000 and the next pivot point below at 1.4800 so a lot of potential downside here. We prefer selling rallies at 1.5500 and 1.5630 looking for price action triggers here, but are open to a breakout pullback setup at the 1.5240 level.
After consolidating for the last two weeks in a 200pip range, the pair broke the 9700 support figure by forming a pin bar and false break in the process. Although we still prefer selling on rallies, there are two plays here. Aggressive bulls can look for possible intraday price action setups off the 9600 figure while bears can wait for a pullback to the 9850 region and look for price action triggers here.
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