ForexInfoBook presents the weekly Forex technical analysis of GOLD (XAUUSD), GBPUSD and USDJPY for 5 to 9 August 2019. During the past two weeks the price action prediction made in our previous analysis on GOLD was very accurate. The Brexit uncertainty continues to make GBP trading relatively risky and the break of 1.2400 rendered our long recommendation invalid. Similarly the support @ 1.1100 was broken on EURUSD which invalidated the long recommendation. With major risk events (ECB, BOE, Fed interest rates and NFP) behind us now, the following trading recommendations may be considered for trading this week.
GOLD Technical Analysis
Even though the FED interest rate decision was USD positive, USD weakened on back of Trade tariffs imposed on China. The NFP data was on expected lines and USD continues to be driven about by trade talks and tariffs for now. GOLD has formed a well defined upward channel with the obvious target seen at the 50% Fibonacci level at 1483.7 – While the break of last month’s high at 1453 is expected this week, the upper trend line of the channel may provide some reversal opportunities. With GOLD’s bullish bias and no expected USD positive events/news in the horizon, it would be very risky to short GOLD at these levels. When GOLD approaches 1484, aggressive traders can consider short positions on reversal confirmation.
A better approach to trading gold for this week would be to enter long positions near the lower trend line in the zone of 1401 to 1407. Close below 1400 should be seen as a break of the bullish move. Stoploss may be placed in near 1395 to avoid stop grabber moves. Traders going long at these levels can consider holding for target of 1483 this month. This recommendation may be considered invalid if the upper trend line is broken and 1483 is reached prior to the price pulling back to 1400 levels.
GBPUSD Technical Analysis
With the October deadline approaching and the probability of a “No Deal” Brexit increasing, GBPUSD is approaching its multi year lows of 1.2000 levels. We may see the pair supported at 1.2000 levels considering the very large short positions built up over past few weeks. In the absence of any GBP positive news and no progress in Brexit deal, any bounce will be seen as a shorting opportunity by traders. A bounce from 1.2000 level is expected to give further momentum for the shorts to break through the strong 1.2000 levels and take the pair to down to its No-Deal Brexit target of 1.1500-1.1300 zone.
The first attempt to test 1.2000 support provides traders with a good low risk, high reward long trade opportunity over the next two weeks.
USDJPY Technical Analysis
USD weakened on announcement of further trade tariffs imposed on China. The NFP data was on expected lines and did not provide any reason for USDJPY to take support from its support at 107 levels. USD continues to be driven about by trade talks and tariffs for now – with break of 106, the pair may be able to reach its multi year low of 104.57 during this week.
USDJPY is likely to find support at this level and traders can consider going long with stoploss below 103.90 and targets of 109. The trade setup offers excellent risk:reward for patient traders.