Currency Charts Net Bullish After Intervention by Global Central Bankers
It's always a good idea to try to understand what the puppet masters wishes are. In this case the puppet masters in question are the US Fed and the Bank of Japan.
Let's take a look at the charts to see what messages are being sent by the markets.
The EURUSD is following through to the upside this week (so far); there should be plenty of upside left.
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I highlighted last week the success that the euro / US dollar (EURUSD) bulls were having in terms of breaking out above short-term resistance (at 1.31716). So far this week, it's been more upside action in the euro!
It looks to me like the EURUSD is in the midst of the "c" wave of an "abc" correction to the upside. The "correction resistance" now looks to be at around 1.36294 to 1.38192 (depending on which pivots – intraday or closing – we use for the "abc" formation). Even at the lower edge of that resistance range, the rest of this trade offers over 4,000 pips of upside potential for the bulls. Size your position wisely, though, as there could be sharp, short-term downside moves on the way up to that target range (and you wouldn't want to get shaken out of the trade prematurely).
The EURJPY has got a chance to break out to the upside this week – which would be a good sign for risk bulls!
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Just as with the EURUSD, the euro / Japanese yen cross (EURJPY) has a chance to continue higher. I note that it "has a chance" to do so because it has yet to conquer resistance on a weekly closing basis. That could change on Friday as long as EURJPY holds up above 111.428 into the weekend. Also, I'm not as clear or sure on the wave count on this chart as I am with the EURUSD's chart. There are a couple of different possibilities that exist in terms of counts on this chart, one of which could come to fruition even if 111.428 is broken. So, on Friday, we can give the edge to the EURJPY bulls. However, I'll be doing so with a watchful eye on this cross to see if there's upside follow through in the coming weeks.
So far, the macro edge has to go to the bulls based on the EURUSD and EURJPY crosses.
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