Weekly Price Action Setups & Key Levels | Aug 31 – Sep 5
EURUSD – Breaks Lower, Headed to Key Support
Now closing bearish 8 of the last 10 days, the Euro broke lower from the consolidation we talked about last week in our weekly market commentary, maintaining that bearish view. Note how the pair closed on the lows to end last week suggesting no profit taking into the weekend.
The Euro is coming close to the key support we mentioned in 1.3100, where we suspect some shorts will cover and take profit. Bears will want to wait for a breakout of the 1.3100 level, or a corrective pullback towards 1.3230 and 1.3345 before getting short. Bulls will want to see the 1.3100 support hold and some bullish price action build there before getting long.
If 1.3100 breaks, then the ‘big figure‘ at 1.3000, and potentially much deeper losses are in store towards 1.27 and 1.21. Keep in mind, we wrote in our Price Action EURUSD Outlook for 2014 that the bearish scenario for the Euro this year will likely lead to the triangle holding, and putting pressure on the bottom of this pattern at 1.2100.
Gold – In Structured Bearish Channel
Although gaining on the week following the pin bar rejection off the swing lows, medium term there are some upside hurdles for the precious metal. First off is the daily 20 EMA and dynamic resistance while the structured channel the PM is in would put the next resistance layers around 1300 and 1310.
For now, the medium and long term outlook remains bearish and the line of least resistance is down. If the yellow metal can hold the 1287 lows this week, then a test of 1300 should be in order, then the 1306/1310 area before finding new sellers.
If however 1287 folds, then 1267 and potentially a much larger move lower is on the cards towards 1254 and 1240.
S&P 500 Index – Still Attempting to Press Higher
Last week in our daily market commentary we suggested the inverted pin bar was likely to be a bullish signal and push prices higher. As you can see in the chart below, the US index did indeed push higher, making new all-time highs in the process at 2005.
On Thursday last week, the index also formed another with trend pin bar before making marginal new highs, then pulling back intra-day. For now, watch the consolidation between 2005 & 1995 key support level, which we tweeted about would act as intra-day support (and indeed it did).
If the 1995 level folds, then we should see some deeper unwinding, perhaps towards 1945. If 2005 breaks, then 2025 seems like the next logical target.
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