I’m on the road this week, so this report will be a bit shorter than many of my past analyses.
As I don't have my regular two-monitor setup available, I therefore can’t visualize everything as I normally do. I do hope today’s substance will make up for the shorter length.
There’s a non-trading reason for this road trip too: my son is going to college. This is a very wistful time for me because I have a phenomenal relationship with my son. But we all know that growing up is a necessary process of life. I'm going to miss having him around every day, but I’m sure he’ll learn a lot from this new and important phase of his life.
Now let me get into this week’s review, starting with the New Zealand dollar …
As measured against a host of currencies, on balance the New Zealand dollar is weakening against most major of its competitors. Here I'm looking at GBPNZD (the British pound versus the New Zealand dollar) pair:
Note that GBPNZD has been in a stealth uptrend for quite a few years now. Along this uptrend you can see it’s regularly retested that sloping line before rising to new highs.
Most recently, GBPNZD established a rather subtle double bottom at the 1.90 level. I find this significant because each of the two bottoms was a bullish key reversal. (That’s when the price tries to make a new low and then rebounds to close at or near the high. It tells us that the buyers were back in control by the end of each week.)
I think this stealthy double bottom at 1.90 will act as a floor and that higher GBPNZD prices are on the way, even if we see some consolidation first.
That’s why I recommended taking a long position in GBPNZD at 1.9801 a couple of weeks ago. Currently this price is hovering at 2.205 or so, which is a decent profit. However, there could still be some turbulence and volatility in this area before the next leg up. So if you’re holding this position and are nervous about keeping those 200-pip gains, feel free to take partial profits at this level.
Having said that, I feel patient traders will ultimately be rewarded handsomely on this trade. I see the New Zealand dollar weakening against a host of other currencies and GBPNZD is well-positioned to reap a substantial reward from this trend.
To further illustrate my analysis, here’s NZDUSD (the New Zealand dollar versus the US dollar):
NZDUSD has run into headwinds at the 0.67 price level consistent with the resistance level it's struggled with in the past. That’s created a double (even triple) top with NZDUSD unable to break out of its long-term downtrend.
Other evidence that NZDUSD will go lower includes the bearish key reversal last week where the price surged higher before closing near the low. I believe this reversal is pointing in the direction of NZDUSD’s future price trend for at least the next few days and weeks. This pair should drop, the only question is how fast and how deeply.
Now here’s GBPJPY (the British pound versus the Japanese yen):
This highlights what could be an amazing emerging opportunity because it looks like this pair is at a key inflection point. Will it go up? Will it go down? Either way the move is likely to be significant.
On the bearish side, the long-term pattern appears to be a rounding top. Within that rounding top, there’s a double top and multiple shoulders on either side to create a complex head and shoulders pattern.
This bearishness is consistent with GBPJPY’s long-term downtrend and suggests lower prices lie ahead.
However, recent price action has shown real momentum to the upside. GBPJPY has been tracing out what looks like a bullish ascending triangle as it rises along a new trendline.
Whether that new trendline holds or not is the big question. What I’m looking for is a breach of the 1.35 – 1.36 level to the downside. If and when that happens, it should be the catalyst for sending prices lower.
If GBPJPY can avoid that breach, then I’m looking for it to take out 1.40 on the upside and launch a new bull trend in this pair.
Adding fuel to the potential GBPJPY fire, we’ve most recently seen an inside bar. (An inside bar is one where the high and low are completely enclosed within the previous high and low.) Such a compressed range is often a catalyst for an explosive move.
I feel the upcoming explosion will direct the price lower, although I’m on the sidelines and waiting to see the direction with certainty. Remember that it’s often the best policy to let the market tip its hand before getting into a trade to ensure you enjoy the best possible risk/reward relationship.
Awhile ago, I advised members to get long GBJPY around 1.35 and we banked a nice 500 pip profit there. But momentum on the upside now seems likely to stall out and my expectation is that we will resume in the direction of the major trend: down.
If the market shows me something different, then I'll jump aboard the “let’s go long GBPJPY again” train.
Now here’s EURUSD (the Euro versus the US dollar):
Last week EURUSD had a major key reversal where it rose just short of the 1.21 area before collapsing by the end of the week. The sellers were in control as the markets closed for the weekend.
This bearish key reversal is likely to put the brakes on recent upward EURUSD momentum, so if you missed the earlier run, don't chase this market now. I feel EURUSD will stall out and prices will either drop back or continue to consolidate between 1.15 and 1.18 for the foreseeable future.
EURUSD also bumped up against resistance at the same level as a historical bearish head and shoulders price pattern. So while it's going to be interesting to see where prices go from here, I ultimately expect EURUSD to rise over time due to USD weakness.
In this week’s video report, I share a huge opportunity.
That’s because, when a major currency starts to show signs that it’s weakening, it often presents opportunities for all associated currency pairs.
And when one goes down, the other goes up.
This results in several key trades that are available right now with some monumental potential.
Here’s what I cover in this week’s report.
- I reveal the currency that is majorly weakening against most other pairs (it’s probably not what you expect).
- The major Double-Bottom on this key currency pair signifies that this is about to go significantly higher (big opportunity for traders that move quickly).
- What this Key Reversal on the NZDUSD means, and my advice on how you can maximize this opportunity
- There’s a huge emerging opportunity on the GBPJPY – we’re at a key inflection point and this has the potential to be the next big trade on the board (I share what I’m waiting for before making my move).
- Although the charts are
alluring, I share why you should AVOID this currency pair and why it could be a
huge TRAP (watch from 7.07)
- What’s next for Silver following it’s breakout of a seven-year downtrend line? Have you missed the boat or is there still more to follow?
- Is a Symmetrical Triangle forming on XAUUSD and if so, then you need to be prepared for what is going to happen (I share full information at 13.50)
- Plus, much more
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