New week, new month and… end of holidays. Investors expect that volatility and liquidity will come back to the markets after summer months of stagnation. But today better stay cautious. USA and Canada are celebrating their labor days, so market may be calmer than expected.
Let’s start today’s Price Action Market Preview. We prepared two majors (EUR/USD, USD/CAD) and three crosses (EUR/AUD, GBP/AUD, GBP/JPY).
EUR/AUD
Currency pair reached key support 1.40500 almost to the pip. It is worth to observe cross in this place, and look for Price Action signals – they will give opportunity to open long positions. It is very strong level, so really nice upward retracement can start here.
EUR/USD
Single currency to American dollar is still falling and approaching 1.3100 barrier. There, we might see stronger retracement, which may drag the price near 1.3300 (important resistance). Of course trend is downward – so playing longs will be risky (but such trades usually have high potential). If price breaks down 1.3100, then next 300-pips sell off looks like a likely scenario.
GBP/AUD
Similar situation to EUR/AUD – price also reached a key support and we could see a strong reaction already. However, there is a lack of Price Action signals which may confirm bulls strength. We should look for them in next few days (H4 and daily chart).
GBP/JPY
Pound to yen cross during last hours of Friday’s session broke above strong resistance, which stopped rallies recently. It may indicate return of the bulls and possible, further increases. Everything should be clearer in the next few session. If price goes up, we will look for long positions (in the case of resistance re-test from the top – which now should act as a support). However, if price falls back immediately, it will be a fake breakout and opportunity to go short. Traders should wait for more information to draw on the chart. We need to remember that Price Action is a reaction to the price behavior.
USD/CAD
Chart looks ideally for long positioning! Strong reaction after loss and support test, which is really working. Now we have three different strategies to trade this signal:
- Purchase after breaking above maximum, SL below minimum,
- Purchas after breaking above maximum, SL below 50% retracement of a candle (better RR ratio than in the first case),
- Buy limit at 50% retracement of a candle, SL below minimum. Better RR ratio than in the first case, and safer SL than in the second one. But there is still a risk that market will not correct the price and we will be left without a position in developing trend. Personally, I prefer this method – so I activate buy limit order at 50% retracement of this candle.
