Weekly Snapshot | May 21 – 25

This week we take a snapshot look at GBPUSD, USDCHF, NZDUSD and USDZAR

GBPUSD

Cable broke dynamic support a couple of weeks ago and continues to look very weak. The bull’s failure to hold the line opens the way for a move lower. A lot lower – potentially all the way down to 1.2100 – 1.2200 region, 1200+ pips away.

The daily picture shows consolidation before the last significant drop and price is currently trading lower than it’s been all year.

My preferred approach to short would be to wait for retraces on the lower timeframes and then look for bearish candles confirming that the retrace is over (and often, providing a nice tight stop). Something like this:

USDCHF

The way the Swissy slid to parity over the last few weeks has been nothing short of incredible.

I like this one for a long because a clear break above here opens the way to 1.2800 with very little reason to sell in between the two (i.e., could be a nice fast move up). A more aggressive trader might buy the bounces off the lower channel trendline. I’m the other guy. I’m going to wait and see if price breaks above the upper line of the channel, and look for a long there. My reasoning is simple – I think price could spend a long time sitting here before it breaks, and I don’t see any reason to sit waiting with it.

NZDUSD

The Kiwi is on its way to the bottom of the multi-year range. I think there is both opportunity to sell in the short term (down to the bottom of the range, shown in 1), and in the longer-term, potentially down to the 2015 lows.

The daily chart appears to indicate that the Kiwi is taking a breather. The short-term trade idea waits for the consolidation to play out, allowing price the chance to retrace up before printing a big, fat rejection candle.

USDZAR

Not a pair I trade, but interesting to see USD strength across the board, including the emerging markets. I find the monthly chart is the easiest to see what’s likely going on here – and it’s a run up into dynamic resistance at 13.60 or thereabouts. It’s not a stretch to imagine everything we’ve seen from mid- to late-2015 as a continued consolidation before the mighty greenback continues its run.

Of course, the consolidation could continue for some time, but I wouldn’t bet against the Dollar until at least 13.60.

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