Three Major Forex Pairs That Look Bullish This Week

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Three Major Forex Pairs That Look Bullish This Week

You Can’t Always Be Right

A few week’s ago I wrote about a signal I felt pretty strongly about, so strongly I titled my post Go Long The Dollar Now. Sadly, the signa didn’t pan out quite the way I though it would but that’s the way it goes sometimes. Trades don’t go the way they are supposed to. What happened? There has been some signs of stability in certain economies that, coupled with the Phase One Trade Deal, suggest there could be some economic firming in the coming year. With economic firming we usually get some policy adjustment and with policy adjustment upward movement in forex markets.

Look at the GBP/USD. The pound skyrocketed not on the Phase One Deal but Boris Johnson’s stunning victory in Parliament. He and the Conservative Party have secured a stranglehold on UK politics that is sure to mean economic expansion. Of course, the Brexit will come first but that should be smooth and quick. Once completed the UK will be free to engage in activity and trade with whomever it wants, at the very least there will be no more uncertainty and a business-friendly government.

The GBP/USD is now testing resistance at the two-year high and looks like it will break on through to the other side. Convergences in the MACD on both the daily and weekly charts agree, upward pressure is building. Once that pressure wears down resistance a move up to the 1.4225 level is very, very possible.

The EUR/USD is showing similar strength if in a different way. This pair has been in a steady downtrend for over two years now and may be in reversal. The pair hit a bottom in September and October that has since confirmed in price action and both the indicators. Stochastic shows strong support at this level while MACD has turned bullish. Price action formed a higher low, moved above the short-term EMA, and is now set to break above resistance. Resistance is at the 1.1200 level, if it is broken a move up to 1.400 is very possible.

The dollar signal wasn’t all bad. There is some sign of bullish activity in the USD/JPY as traders begin to move away from risk-off yen trades to risk-on dollar trades. The current point of resistance is the 109.50, if prices move above that a strong updraft could begin. The long-term target is 112.00, before that are targets near 110.00 and 111.00.

Forex Currency Pairs: The Ultimate 2020 Guide + Cheat Sheet

You would never buy a house without understanding the mortgage, right? Yet when it comes to the Forex market, many traders forget to familiarize themselves with the currency pairs they’re buying and selling.

I’ll admit that trading currencies is quite different from purchasing a home, but the idea is the same – you need to understand where your money is going.

How do I know that many traders skip this step?

In addition to receiving hundreds of emails every month, I was once a beginner too.

Sure, I understood the very basics of currency pairs before I opened a live trading account, but I certainly didn’t know as much as I should have.

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So to save you from making some of those same mistakes, I’ve put together a crazy-detailed lesson of everything you could want to know about Forex currency pairs.

My goal with this lesson is to take you from understanding the basics to becoming a complete currency guru. So whether you’ve been trading for two days or two years, I can all but guarantee that you’ll learn something new.

As always, be sure to leave a comment at the bottom of this post and don’t forget to share it with your friends.

Let’s get down to business!

Anatomy of a Currency Pair

Before we get into the nitty-gritty, it’s important that you understand what a currency pair is and how it moves.

As you might have guessed from its name, each pair involves two currencies. In this way, the value of one currency is compared to and is thus relative to the currency it’s paired against.

If that sounds confusing don’t worry, it will be abundantly clear by the time you finish this section.

The first currency in the pair is the “base currency” and the second is the “quote currency.”

This naming convention is the same regardless of the currency pair you’re trading.

You get the idea. Now let’s explore the two terms in greater detail.

Base currency

The base currency is the one that is quoted first in a currency pair.

Using EURUSD as an example, the Euro would be the base currency. Similarly, the base currency of GBPUSD is the British pound (GBP).

Quote currency

By process of elimination, you know that the quote currency is the one that comes second in a pairing.

For both the EURUSD and the GBPUSD, the US dollar is the quote currency.

You Can’t Make Money if They Don’t Move

There are essentially two ways in which any currency pair can move higher or lower.

  1. The base currency can strengthen or weaken
  2. The quote currency can strengthen or weaken

Because the Forex market never sleeps and thus currency values are always changing, both the base currency and quote currency are in a constant state of flux.

In our example, if the Euro (base currency) were to strengthen while the US dollar remained static, the EURUSD would rise. Conversely, if the Euro weakened the pair would fall, all things being equal.

If on the other hand, the US dollar (quote currency) were to strengthen, the EURUSD would fall. And if the USD weakened, the currency pair would rally as the Euro would gain relative strength against its US dollar pairing.

All of the hypotheticals above assume that nothing else has changed for the pair.

Here’s a visual of the relationship. In this instance, the Euro is strengthening against the US dollar.

Not surprisingly, the next example is the EURUSD in a bear market. Here the Euro is weakening against the US dollar.

Pretty simple, right?

If you’re already familiar with the content so far, don’t worry, we’ll be getting into more advanced territory shortly.

As you can imagine, the velocity of any move depends on the relationship between the two currencies. For instance, if one is strengthening while the other is weakening, the move will be more pronounced than if only one currency is on the move.

Last but not least, it’s important to remember that the relationship between the base and quote currency is always changing. So just because the EURUSD is rallying in the current session doesn’t mean it will be tomorrow or even one hour from now.

The Dynamics of Buying and Selling Currencies

One area that often confuses traders is the idea of buying and selling currencies.

In the stock market, you can either buy (and sometimes sell) shares of stock. There are no pairings, and the value of one stock is not dependent on that of another.

However, in the Forex market, all currencies are paired together. So when you’re ready to place a trade, are you buying or selling?

The answer is both.

For example, if you sell the EURUSD (also referred to as going “short”), you are simultaneously selling the Euro and buying the US dollar.

Conversely, if you buy the EURUSD (also referred to as going “long”), you are buying the Euro and selling the US dollar.

If not, feel free to review this section as many times as necessary.

To clarify, this does not mean you have to place two orders if you want to buy or sell a currency pair.

As a retail trader, all you need to know is whether you want to go long or short. Your broker handles everything else behind the scenes.

There’s also only one price for each pair. Remember that a currency’s value depends on the currency sitting next to it.

Alright, so we’ve breezed through several terms and concepts when it comes to trading Forex currency pairs.

At this point, you should have a firm understanding of what a currency pair is as well as the dynamics of buying and selling.

If not, feel free to review the material above as many times as necessary before moving on.

Now it’s time for the meat and potatoes of the lesson.

Currency Baskets (Majors, Minors and Crosses)

This is my favorite part because now we get to dig into the various classifications of currency pairs. And later, I’ll uncover the pairs that are affected by changing commodity prices as well as a few of the safe haven currencies.

Don’t know what those are?

No problem. By the time you finish this section, you’ll be a currency guru!

Major Currency Pairs

Major currency pairs are to the Forex market what Apple and Amazon are to the stock market.

They are by far the most popular and therefore the most liquid.

Currency Pair Countries Currency Name
EUR/USD Eurozone / United States Euro / US dollar
USD/JPY United States / Japan US dollar / Japanese yen
GBP/USD United Kingdom / United States British pound (sterling) / US dollar
USD/CHF United States / Switzerland US dollar / Swiss franc
USD/CAD United States / Canada US dollar / Canadian dollar
AUD/USD Australia / United States Australia dollar / US dollar
NZD/USD New Zealand / United States New Zealand dollar / US dollar

Every major currency pair includes the US dollar. So if you ever see a pair that doesn’t involve the USD, it isn’t a major.

Everyone wants to trade the major pairs listed above. Mostly because, well, they’re the most popular, and who doesn’t want to put their money in the most traditional assets?

But here’s the thing…

The majors are not the end all be all when it comes to trading Forex.

It’s important to remember that there are dozens of pairs at your disposal.

While it is true that these are the most traded and are therefore the most liquid, popularity doesn’t pay the bills, favorable setups do. And unless your trading account is the size of Warren Buffett’s bank account, you don’t need the majors.

What in the heck am I talking about, you ask?

I’m referring to the well-known fact that everyone wants to trade the major currency pairs regardless of what the price action looks like at any given time.

For example, if the EURUSD has been choppy for weeks and isn’t producing anything favorable, you’re probably better off looking elsewhere.

But instead what I see quite often are folks trying to force trades on the EURUSD, GBPUSD, etc. simply because it’s what everyone else is doing.

This is one reason why I’m not an advocate of mastering one or two currency pairs at a time. In fact, making this mistake can quickly lead to forcing trades and overtrading.

I’ll expand on this idea shortly.

Minor Pairs and Cross Currencies

So if the major pairs include the US dollar, we can infer that minor currency pairs are those that do not include the US dollar.

Pretty straight forward, right?

Now, here’s where some traders get confused. The truth is, there are far more currency crosses than there are minor pairs.

A lot of folks make the mistake of thinking that a minor to be any pair that doesn’t include the US dollar.

A currency cross is any pair that doesn’t include the US dollar.

Minor currency pairs, on the other hand, make up a fraction of the crosses that are available for trading.

In other words, all minors are crosses, but not all crosses are minors.

Let’s define these two terms before we go on.

Cross Currency Pairs (A.K.A Minors)

It’s time to clear up some confusion I see quite often around the web regarding minor pairs and currency crosses.

A currency cross is any pair that does not include the US dollar. As such, these pairings don’t offer nearly as much liquidity as the majors we discussed earlier.

A minor pair, on the other hand, is a major currency cross. As you now know, a cross doesn’t include the US dollar. Therefore, these minors are comprised of the Euro (EUR), British pound (GBP) and the Japanese yen (JPY).

If it’s all a little fuzzy at the moment, don’t worry. The tables below should help to clear things up.

Euro Crosses

Currency Pair Countries Currency Name
EUR/GBP Eurozone / United Kingdom Euro / British pound (sterling)
EUR/AUD Eurozone / Australia Euro / Australian dollar
EUR/NZD Eurozone / New Zealand Euro / New Zealand dollar
EUR/CAD Eurozone / Canada Euro / Canadian dollar
EUR/CHF Eurozone / Switzerland Euro / Swiss franc

Japanese Yen Crosses

Currency Pair Countries Currency Name
EUR/JPY Eurozone / Japan Euro / Japanese yen
GBP/JPY United Kingdom / Japan British pound (sterling) / Japanese yen
AUD/JPY Australia / Japan Australian dollar / Japanese yen
NZD/JPY New Zealand / Japan New Zealand dollar / Japanese yen
CAD/JPY Canada / Japan Canadian dollar / Japanese yen
CHF/JPY Switzerland / Japan Swiss franc / Japanese yen

British Pound Crosses

Currency Pair Countries Currency Name
GBP/AUD United Kingdom / Australia British pound (sterling) / Australian dollar
GBP/NZD United Kingdom / New Zealand British pound (sterling) / New Zealand dollar
GBP/CAD United Kingdom / Canada British pound (sterling) / Canadian dollar
GBP/CHF United Kingdom / Switzerland British pound (sterling) / Swiss franc

Other Crosses

Currency Pair Countries Currency Name
AUD/NZD Australia / New Zealand Australian dollar / New Zealand dollar
AUD/CAD Australia / Canada Australian dollar / Canadian dollar
AUD/CHF Australia / Switzerland Australian dollar / Swiss franc
NZD/CAD New Zealand / Canada New Zealand dollar / Canadian dollar
NZD/CHF New Zealand / Switzerland New Zealand dollar / Swiss franc
CAD/CHF Canada / Switzerland Canadian dollar / Swiss franc

But if the major currency pairs get most of the attention and carry the most liquidity, why would anyone want to trade minor currency pairs and especially crosses?

Make no mistake, while the daily volume for these crosses is less than the majors, they are certainly not illiquid by any means.

In fact, many of the major crosses average more daily volume than some stock exchanges.

Remember that the foreign exchange market is the most liquid financial market in the world, so even some of the less popular currencies are extremely liquid.

The Exotics

The exotic currency pairs are the least traded in the Forex market and are therefore less liquid than even the crosses we just discussed.

And while the liquidity of the exotic pairs is more than enough to absorb most orders, the “thin” order flow often leads to choppy price action.

Additionally, the technical analysis we like to use here at Daily Price Action is less reliable. As a general rule of thumb, the more liquid a market is, the more you can rely on the technicals.

So what are these exotic currency pairs, you ask?

Abbreviation Country Abbreviation Country
AED UAE Dirham ARS Argentinean Peso
AFN Afghanistan Afghani GEL Georgian Lari
MYR Malaysian Ringgit AMD Armenian Dram
GYD Guyanese Dollar MZN Mozambique new Metical
AWG Aruban Florin IDR Indonesian Rupiah
OMR Omani Rial AZN Azerbaijan New Manat
IQD Iraqi Dinar QAR Qatari Rial
BHD Bahraini Dinar IRR Iranian Rial
SLL Sierra Leone Leone BWP Botswana Pula
JOD Jordanian Dinar TJS Tajikistani Somoni
BYR Belarusian Ruble KGS Kyrgyzstanian Som
TMT Turkmenistan new Manat CDF Congolese Franc
LBP Lebanese Pound TZS Tanzanian Schilling
DZD Algerian Dinar LRD Liberian Dollar
UZS Uzbekistan Som EGP Egyptian Pound
MAD Moroccan Dirham WST Samoan Tala
EEK Estonian Kroon MNT Mongolian Tugrik
MWK Malawi Kwacha ETB Ethiopian Birr
THB Thai Baht TRY New Turkish Lira
ZAR South African Rand ZWD Zimbabwe Dollar
BRL Brazilian Real CLP Chilean Peso
CNY Chinese Yuan Renminbi CZK Czech Koruna
HKD Hong Kong Dollar HUF Hungarian Forint
ILS Israeli Shekel INR Indian Rupee
ISK Icelandic Krona KRW South Korean Won
KWD Kuwaiti Dinar MXN Mexican Peso
PHP Philippine Peso PKR Pakistani Rupee
PLN Polish Zloty RUB Russian Ruble
SAR Saudi Arabian Riyal SGD Singaporean Dollar
TWD Taiwanese Dollar

While the table above is fairly comprehensive, it is by no means a complete listing of every exotic currency in the world. However, it does cover some of the most popular of the less popular exotics.

But before you rush off to add this basket of currencies to your trading platform, there are a few things you should know.

Liquidity Concerns

As I mentioned earlier, these Forex exotics are less liquid than their more standard counterparts. And while most of them can easily support the majority of retail orders, the lack of volume can adversely affect the spread between the bid and the ask.

Also, in my experience, the study of technical analysis works best in highly liquid markets. This is one reason why I made the transition from equities to Forex in 2007.

Because the exotic currency pairs lack sufficient liquidity, at least compared to that of other pairs, the accuracy of technical analysis can suffer. So even if you find a pair that has a favorable spread, the lower volume may adversely affect your trading performance.

Limited Historical Data

At least two or three times a week I scan back several years on a particular currency pair. This is especially true if I’m on the fence about a key support or resistance level.

For those who have always traded the majors and crosses, the ability to view historical data is something you’ve come to expect.

However, if you trade the exotics listed above, you may not have that luxury.

Some of these currencies simply haven’t been around long enough to establish a significant track record.

In other cases, your broker may not offer the data. Remember that these exotics are far less popular than even the crosses, so some brokers decide that storing and updating the data simply isn’t worth their resources.

Choppy Price Action

This is perhaps the number one reason I avoid most exotic currency pairs like the plague.

While you may be able to find a few that have favorable movement, for the most part, they are extremely choppy and volatile currencies to trade.

Here’s an example of ZARJPY. As you know from the currency tables above, that’s the South African rand versus the Japanese yen.

As you can see, the price action above is less than ideal. And keep in mind that the ZARJPY is relatively “mild” in terms of the chop you might see on any given day.

Opportunity Cost

Last but certainly not least is the opportunity cost associated with trading exotic currency pairs.

What does this mean, exactly?

It means that if you were to take a trade on the EURTRY (Euro / Turkish Lira), you’re tying up a portion of your capital that could be used elsewhere. You now have a level of exposure that you didn’t have 5 minutes ago.

As such, you are now somewhat limited in what you can do should a favorable setup arise on a more liquid pair such as the EURUSD or the USDCAD.

Of course, you could make the same case about any position, but with dozens of other currency pairs at your disposal, you certainly have to weigh the opportunity cost associated with trading a less liquid market.

The Three Commodity Pairs (What You Need to Know)

As the name implies, commodity currencies are those that rely on their respective country’s export activities.

Developing countries such as Burundi and Tanzania are among them. However, it also applies to countries such as Canada, Australia, and New Zealand.

Although there are several others on the list, the only commodity currency pairs that you need to know for this lesson are USDCAD, AUDUSD, and NZDUSD.

You should know that the Canadian, Australian and New Zealand dollar are also known as the commodity dollars, or “comdolls.”

Let’s take a look at each pair in detail.

USDCAD

The US dollar versus the Canadian dollar is one of the more sensitive commodity currency pairs. This sensitivity is due to the vast amount of natural resources that flow from Canada, much of which makes its way to the United States.

Among these natural resources is oil, which is a primary export for Canada and one that is vital to the health of the global economy.

In fact, Canada exports over 2 million barrels a day to the US alone. This high dependency on the commodity as an export makes the Canadian dollar vulnerable to fluctuations in the price of oil.

Although the correlation is never static, over the last ten to fifteen years, the Canadian dollar has held a positive correlation to oil of more than 75% on average.

This relationship means that when oil rises the Canadian dollar strengthens. Conversely, when oil depreciates so too does the CAD.

Because the CAD is our quote currency in USDCAD (remember, it’s the second in the pairing), the currency pair has an inverse correlation to oil.

AUDUSD

Australia is one of the world’s largest exporters of gold. In fact, as of 2020 the country was the second largest gold producer only second to China.

Here’s a chart showing how the Aussie dollar has tracked gold prices over time.

So as you might expect, just like oil exports heavily influence the Canadian dollar, the Australian dollar is at the mercy of the country’s gold exports.

Why does this matter?

It matters because investors tend to flock to gold during times of economic unrest. And if the Australian dollar tracks gold prices, then there’s a good chance that the Aussie will also capitulate during hard economic times.

But if this is true, why did the AUDUSD plummet during the 2008 global financial crisis?

That’s a great question, and we find the answer once we dig into the “safe haven” status that the US dollar often brings to the table.

During times of economic uncertainty or struggle, investors tend to favor the US dollar. So even though the Aussie was riding the gold wave at the time (which wasn’t very impressive as you’ll see below), the US dollar was strengthening at a faster pace.

The Australian dollar also tends to track equities, so when these markets began to capitulate back in 2008 so too did the AUD.

Remember, all value is relative in the currency market.

NZDUSD

Despite the small size of New Zealand, the small island nation has an abundance of natural resources. However, the country’s significant agricultural presence is what attracts the “commodity currency” label.

These resources combined with the massive international trade and it’s little wonder why the New Zealand dollar is affected by global commodity prices.

However, unlike the Canadian dollar or Australian dollar, the NZD isn’t typically tied to the fluctuations of one commodity.

Rather, the currency is affected by a basket of commodities and is one of the top exporters of milk, meat, and fruits.

Safe Haven Currencies: Your Virtual Bomb Shelter

A safe haven is any asset that has a strong likelihood of retaining its value or even increasing in value during market downturns.

One of the most popular safe havens is in the form of a metal rather than a currency. But contrary to popular belief, gold isn’t a great performer during economic uncertainty or even recessionary periods.

During the 2008 global crisis, for example, gold was locked into a range and really only managed to move sideways with slight gains seen towards the end of the recession.

Note: The gray area represents the unofficial start and end of the 2008 crisis

Of course, as you can see from the chart above, the longer-term appreciation of gold as a safe haven can be quite considerable and should therefore not be underestimated.

Swiss Franc (CHF)

In the Forex market, the Swiss franc (CHF) is considered a safe haven currency, hence the reason the USDCHF experienced mixed results during the 2008 period.

Notice how although the US dollar gained against the franc in late 2008, the results weren’t nearly as substantial or lasting as something like the AUDUSD chart above or any one of the yen pairings below.

US Dollar (USD)

The US dollar often enjoys the same “safety net” status, however, when matched up against a more formidable safe haven, the currency tends to move lower during times of economic unrest. The USDJPY chart below is a perfect example.

Remember that if the quote currency experiences heavy appreciation, the pair is likely to move lower over time.

Japanese Yen (JPY)

Last but certainly not least is the Japanese yen, another currency that has a long history of safe haven status.

Notice how the yen crosses below fared during the 2008 meltdown.

USDJPY

GBPJPY

AUDJPY

As you can see, the Japanese yen appreciated massively against all three of its counterparts above.

Over the years the yen has been one of the more consistent safe haven currencies, which has made it my go-to currency when fear begins to grip global markets.

But just because an asset held its value or appreciated during the last market downturn does not mean it will behave in the same manner in the future.

The ever-changing nature of the financial markets doesn’t offer guarantees such as this. However, the assets mentioned above do have a history of retaining their value when things turn sour.

Know Your Currency Correlations

If you only remember one thing from this lesson, let this be it.

A currency pair’s correlation refers to the similarities shared by various pairings. These commonalities lead to both positive and negative associations.

For example, under normal circumstances, the EURUSD and the USDCHF are negatively correlated. In other words, if the EURUSD ends the day higher by 100 pips, chances are the USDCHF finished the day lower.

An example of two positively correlated pairs would be EURUSD and GBPUSD. In our previous example, if the EURUSD ends the session higher by 100 pips, it’s likely that GBPUSD also ended the day higher.

So you get the idea. Again, pretty basic stuff but yet essential knowledge if you wish you achieve consistent profits in the Forex market.

Why is it so important, you ask?

Because managing risk is your number one job as a trader. And if you aren’t familiar with these currency correlations, you can inadvertently double your risk.

For example, if you sell the EURUSD and buy the USDCHF, you have essentially doubled your risk.

At the same time, if you were to buy both currency pairs, you’ve contradicted yourself. For example, if you sell two negatively correlated pairs, chances are only one of the two trades will be successful.

So what is a Forex trader to do?

It comes down to checking the currency correlation before placing a trade.

Here is the currency correlation table I use.

What’s nice about the chart above is that it’s divided into various time frames. This separation makes it easy to determine how one currency pair correlates to another and if you’re approach makes sense from a risk to reward perspective.

So What Do I Trade? (Top Secret)

Just kidding, it isn’t really top secret. But I will say that this is the first time I’ve publicly announced the currency pairs I trade.

EUR/USD GBP/USD EUR/GBP USD/CHF AUD/USD NZD/USD USD/CAD USD/JPY
EUR/CAD GBP/CAD AUD/CAD NZD/CAD EUR/AUD GBP/AUD EUR/NZD GBP/NZD
AUD/NZD EUR/JPY GBP/JPY AUD/JPY NZD/JPY CAD/JPY

So which pairs are my favorite to trade?

Honestly, I don’t have favorites. I’m an opportunist so rather than favoring particular currencies, I gravitate toward favorable technical patterns.

This is why you’ll often see me commenting on currency crosses over in the daily setups. I enjoy trading the majors, but I certainly don’t discriminate should a compelling setup arise on something less liquid.

With that said, the pairs I started with back in 2007 are highlighted in the table above. These were my go-to currency pairs back then, and many still are today with a particular emphasis on the AUDUSD and the NZDUSD.

Wrapping Things Up

Wow, this lesson is now over 4,000 words. Who knew someone could write so much about Forex currency pairs?

But seriously, I’ve always said that the process of becoming a great Forex trader is more important than the destination. And if you want to become consistently profitable, it’s essential that you understand everything there is to know about the currency pairs you’re trading.

Many traders make the mistake of skipping these necessary steps before putting their hard-earned money at risk.

As they say, knowledge is power. And nothing is more powerful for a trader than understanding the currency pairs that make up the Forex market.

I sincerely hope this lesson has answered any question you may have had. As always, if I missed something, please let me know in the comments section below.

General FAQ

A currency pair is a pairing of currencies where the value of one is relative to the other. For instance, EURUSD is the value of the euro relative to the U.S. dollar.

There are hundreds of currency pairs in existence. The exact number is difficult to come by as some exotic pairs come and go each year.

Major currency pairs (or just majors) are those that include the U.S. dollar. EURUSD, USDJPY, GBPUSD, USDCHF, USDCAD, AUDUSD, and NZDUSD are all majors.

Currency crosses (or cross currencies) are the more liquid currencies that do not include the U.S. dollar in their pairing. Note that these are NOT exotics like the Iraqi Dinar (IQD). Crosses include EURGBP, EURCAD, GBPJPY, CADJPY, GBPAUD, etc.

I Want to Hear From You

What currency pairs do you trade? Did I miss anything?

I’d love to hear from you so be sure to drop me a line in the comments section below. I always make it a point to respond.

3 Currency Pairs that Sentiment Traders are Watching

  • USDCAD Trending Higher as Sentiment Slides Negative
  • USDJPY Moves Lower as Positive Sentiment Climbs
  • GBPUSD Drop Coincides with Retail Buying

Retail sentiment is the first tool I use when analyzing a currency pair for a potential trade. It has been a part of my strategies for the last few years and it is something I have discussed in depth before (for those that are unfamiliar with how it works.) Today, we will look at 3 currency pairs most recent support and resistance levels, and see what sentiment can tell us as we look for opportunities.

The US Dollar has shown strength the past 6 months across the board, so it is not a surprise to see the gains it has had specifically against the Canadian Dollar. Breaking 1.20 today marks its highest level since 2009, but it has since settled below that amount today. Major resistance can be found at 1.2045, with the closest major support down around 1.1800.

Learn Forex: USDCAD Trending Higher – Support and Resistance

(Created using Marketscope 2.0 charting package )

Sentiment remains negative and continues to move that direction as more and more retail traders look to short the pair. Since SSI is a contrarian tool, we can use this to fuel our bullish bias as USDCAD trends higher. A pullback to 1.1800 would be considered a “safer” entry level while a break above 1.2045 could spark buyers to act as well.

Learn Forex: USDCAD SSI – Most Retail Traders are Selling, Bullish Signal

USD/JPY – Bearish Bias

The USDJPY hit a high near 122 last month but has been unable to maintain that level ever since. 116 looks like the only major support level in its way before a large drop. For traders looking to get into a short position at a more favorable price, a bearish channel gives us an entry zone near 117.75.

Learn Forex: USDJPY Trending Lower – Bearish Channel

(Created using Marketscope 2.0 charting package )

With the shift in momentum to th3e downside, retail traders have shifted to buying the pair. Since SSI is positive, this give sentiment traders more reason to sell.

Learn Forex: USDJPY SSI – Most Retail Traders are Buying, Bearish Signal

GBP/USD – Bearish Bias

Lastly we take a look at the British Pound against the US Dollar. US Dollar strength has prevailed against the Pound for the past few months with only a small handful of retracements along the way. Looking at Fibonacci Retracement with the most recent drop can give traders potential sell zones if they believe the pair will continue lower. We see resistance near 1.5250, 1.5325 and 1.5400.

Learn Forex: GBPUSD Retracing from a Large Drop – Fibonacci Retracement Drawn

(Created using Marketscope 2.0 charting package )

Like clockwork, as GBPUSD has continued to fall, sentiment has remained positive. Until sentiment flips the other way, the GBPUSD could continue to move lower.

Learn Forex: GBPUSD SSI – Most Retail Traders are Buying, Bearish Signal

Each of these currency pairs show promise from a sentiment perspective, but as always, we recommend due diligence before placing these trades on your trading account. Also, feel free to paper trade these positions on a Free Forex Demo account to practice trading currencies risk-free.

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Guide How To Become Binary Options Trader
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